Bond yields rise; Budget caution trumps OMO

Written by Reuters | Mumbai | Updated: Feb 27 2013, 07:09am hrs
Bond yields rose on Tuesday as caution ahead of the Budget offset an initial positive start in debt markets after RBI announced a bond-buying programme, due later this week.

A sell-off in global risk also weighed, sending five-year interest rate swaps to their lowest in nearly a month, on fears Italy's inconclusive elections would revive euro zone debt concerns. Dealers said bonds have largely factored in expectations for an austere 2013/14 budget on Thursday, with the government's net borrowing likely about R4.7 lakh crore, roughly in line with current year's levels.

The benchmark 10-year bond yields ended 2 basis points (bps) higher at 7.82% after earlier easing to 7.78%. Total volume on RBI electronic trading platform was at R32755 crore.