Tuesday, July 7, 2009

Bond Prices Fall On Higher Borrowing Plan - July 07, 2009

The bond prices dipped on July 6 after the announcement by the Government of a substantially higher borrowing programme of Rs 4.5 lakh crore for the fiscal in the Budget, which was much above the market expectations. The huge borrowing programme is likely to put pressure on the interest rates. This increased borrowing may exert upward pressure in yields on a week-on-week basis, said Mr B. Prasanna, Managing Director and Chief Executive Officer, ICICI Securities Primary Dealership Ltd.

The total traded volumes on the order matching system were lower at Rs 12,395 crore (Rs 14,405 crore).

The 6.07 per cent-5 year-2014 paper opened at Rs 99.4 (6.21 per cent YTM) and closed at Rs 98.43 (6.44 per cent YTM) as against the previous close of Rs 99.3 (6.23 per cent YTM).

Moreover, the 7.94 per cent-12 year-2021 paper opened at Rs 107.45 (7 per cent YTM) and closed at Rs 105.41 (7.25 per cent YTM), down by more than Rs 2 from the previous close of Rs 107.29 (7.02 per cent YTM).

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