Investors may sell ahead of debt auctions, 10-yr dips to 8.1%

May 22 | Updated: May 23 2007, 05:30am hrs
Indias 10-year bonds fell, paring earlier gains, on speculation that some investors will sell to raise cash for government debt auctions this week. Yields, which move opposite to prices, gained as the government prepares to raise as much as Rs 120 billion this week by selling treasury bills and bonds. Bonds also declined on speculation investors will offload to benefit from Mondays rally, the biggest in almost a month, said Anoop Verma, a bond trader at Development Credit Bank Ltd based in Mumbai.

Prices could move further down, he said. People are making room for investments at the auction. Also, the gains in recent days have been good. Traders are going to take profits.

The yield on the benchmark 8.07% note due January 2017 rose 1 basis point, or 0.01 percentage point, to 8.1% in Mumbai, according to RBIs trading system. The price fell 4 paise per Rs 100 face value, to 99.77. The government will sell treasury bills worth Rs 40 billion on Wednesday. It will auction 8-year and 15-year bonds worth a total of Rs 80 billion on May 25, as part of its Rs 1.55 trillion borrowing program for the fiscal year that began April 1.

Bloomberg