Yield on 10-year G-Sec softens 4.85 bps

Yields on Government Securities (G-Secs) thawed on Wednesday after rising two days on the trot amid hopes that the Reserve Bank of India (RBI) will intervene to keep yields in check ahead of the ₹31,000-crore G-Sec auction scheduled for Friday.

Yield on the benchmark 10-year G-Sec, carrying a coupon rate of 5.77 per cent, softened 4.85 basis points (bps) to close at 6.101 per cent (previous close: 6.1495 per cent), with its price rising 34 paise to close at ₹97.64 (₹97.30).

In the first two days of the current week, yield on the aforementioned G-Sec cumulatively rose about 20 bps with its price declining ₹1.39.

Bond yields and price move in opposite directions. One basis point is equal to one-hundredth of a percentage point.

Yield on the 2025 G-Sec, carrying a coupon rate of 5.15 per cent, softened about 12 bps to 5.5382 per cent over the previous close of 5.6591, with it price going up about 50 paise to close at ₹98.3850 (₹97.89).

Marzban Irani, CIO-Fixed Income, LIC Mutual Fund, said: “G-Sec yields have been rising since Budget announcement. The RBI monetary policy review is coming up on Friday, where there may be an announcement on additional OMO or HTM (held-to-maturity) limits.

“If there is no further positive announcement in the policy, yields might inch up again due to heavy supply.”

As to why the yield on the 2025 paper thawed much more than that on 10-year benchmark, Irani reasoned that if market players are not sure what will happen (regarding the monetary policy committee’s decision on the policy rate, OMO or HTM) on Friday, they would want to buy 5 year G-Sec instead of 10 year.

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