Bonds jump as RBI readies to infuse Rs 9979 crore

Indian soveriegn bonds continue to rally as Reserve Bank of India (RBI) plans to add nearly Rs 10,000 crore in open market operations (OMO) via debt placements. 

RBI said that it will buy around Rs 100 billion, or Rs 9979.12 crore worth notes via its open-market operations on Thursday through multi-security auction using the multiple price method, according to a statement.

This will be the first open market operations (OMO) purchase under newly chosen Governor Urjit Patel, who took the charge on September 4.

"Benchmark note at INR103.61, highest since its issuance, and against INR103.31 previous close. Yield eases to 7.06%, lowest since September 18, 2009, from 7.10% yesterday. Indian benchmark yield pegged in 7.04%-7.09% band today," IFA Global said. 

In the beginning of current financial year, in April, the central bank had infused around Rs 9,000 crore.

The eligible participants should submit their offers in electronic format on the Reserve Bank of India Core Banking Solution (E-Kuber) system between 10.30 a.m. and 12.00 noon on September 8, 2016 (Thursday). Only in the event of system failure, physical offers would be accepted. Such physical offer should be submitted to Financial Markets Operations Department in the prescribed form obtainable from RBI website before 12.00 noon", RBI said in a notification. 

The result of the auction will be announced on the same day and payment to successful participants will be made during banking hours on Friday, September 9, 2016.

At 0924 hours, the yield on government notes due January 2026 dipped 4bps to 7.06%, as shown by RBI’s trading system. If it closes at this level, it will be the lowest for a benchmark 10-year security since August 2009.