Amid liquidity crunch, shorter-tenure govt bonds lag 'longer' peers

Short-term government bonds fell behind longer-dated securities in demand this month so far due to a liquidity crunch in the banking system and expectations of a delay in a rate cut, said market participants.

Investors have favoured longer-tenure government bonds, or g-secs, with insurance companies and pension funds leading the charge by stocking up on those with maturities of 30 years and more.

Preference for longer-term securities was strengthened by the conclusion of the borrowing programme on Friday, which compelled institutional investors to fulfil their requirements in the secondary market.

While banks tend to favour shorter tenures due to their