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  1. Seeking RBI intervention, Bollywood style! Kotak AMC CIO parodies popular Hindi song as sovereign bonds fall

Seeking RBI intervention, Bollywood style! Kotak AMC CIO parodies popular Hindi song as sovereign bonds fall

The benchmark 10-year yield rose six basis points to 8.06 percent on Tuesday, the highest close for a benchmark bond since Nov. 2014, while the rupee fell to 71.5750 per dollar.

By: | Published: September 5, 2018 12:39 PM
bond funds, monetary policy, bond yields, long duration bonds, Fixed Maturity Plans, FMPs, Investors are pinning their hopes on OMO purchases to support the battered bond market.

As India’s sovereign bond yield surged, one fund manager went Bollywood to tell central bankers why intervention is needed now. Lakshmi Iyer, chief investment officer at Kotak Mahindra Asset Management Ltd., tweeted concern about the 10-year yield touching 8 percent to the tune of a popular song from the 1998 movie Ghulam — or slave. The yield move has been swifter than most analysts anticipated.

Iyer, who oversees fixed-income investments at the 1.28 trillion rupees ($17.9 billion) asset manager, pointed out how market sentiment will be boosted if the Reserve Bank of India buys bonds through so-called open market operations to inject liquidity.

Investors are pinning their hopes on OMO purchases to support the battered bond market, which has declined in six of eight months this year. Higher oil prices, an expanded supply of debt and the rupee’s drop to a record low amid an emerging-market rout have all contributed to the selloff.

“You have to get some lighter moments when you are not able to pinpoint when the yield climb will stop,” said Iyer, who is a die-hard fan of Bollywood movies. “Something is required to nip this moment in the bud.”

The benchmark 10-year yield rose six basis points to 8.06 percent on Tuesday, the highest close for a benchmark bond since Nov. 2014, while the rupee fell to 71.5750 per dollar.

The RBI might buy sovereign debt worth about $50 billion in the six months to March 31, Bank of America Merrill Lynch analysts estimated in an Aug. 7 note. It has made purchases worth about $4.2 billion so far.

Here is LAkshmi Iyer’s original tweet:

Lakshmi Iyer@Lakshmi1876 Ae Kya bolti tu Ae Yields are rising Sun Suna Ayega OMO kya ?Kya, Hoga, OMO ka faayda Arey system ko liquidity milega, yield ko support milega, market sentiment improve hoga Aur Kya !!!! Bond trader ki kahaani Bollywood ki zubaani ???? India 10yr bond yield @ 8%
Sent via Twitter for iPhone.

Here is an English translation of Iyer’s tweet:

What do you say?Yields are risingListenYes Will OMO come?What will happen, what will be the benefit of an OMOSystem will get liquidity, yields will get support and market sentiment will improveWhat else!!!!

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