War Fears Take Toll On Gilts Prices

Mumbai, January 28: | Updated: Jan 29 2003, 05:30am hrs
Fear over Iraq and reports about the governments decision to prepay its debt sent markets in a frenzy on Tuesday. "The market was already tense over the Iraq issue and a further bomb was dropped by reports of the governments intension to prepay its debt through government borrowings," said a treasury head of a private bank.

Government Securities (G-Sec) prices were down by as much as between Re one and Rs two and the benchmark 10 year yield is up to 6.20 per cent. The market is expecting the 10 year yield to touch 6.25 per cent in a short while.

A bank treasurer mentioned that according to the borrowing schedule there is close to Rs 15000 crore left from the government schedule. On top of that if the government decides to prepay its foreign debt, the market which is already tight on liquidity, will not be able to support the governments demand in the next one and a half months.