India benchmark yield seen at 7.25% by Sep on rising supply - IDFC First Bank

IDFC First Bank

12/07/2023 03:45

* Indian benchmark bond yield is expected to rise further
amid
rising supply and hit 7.25% by September, IDFC First Bank says
    * "State debt supply which tends to be duration heavy, is
expected
to be higher in FY24 as states will not get support from GST
compensation cess," India economist Gaura Sen Gupta says in a
note
    * Benchmark 7.26% 2033 bond yield  IN072633G=CC  at 7.09%,
after
hitting 7.18% on Monday
    * Absence of bond redemption in July-September leads to an
increase in net supply to 4.47 trillion rupees ($54.28 bln),
against 3.05 trillion rupees in April-June
    * Indian states aim to raise 2.37 trillion rupees via debt
sale in
this quarter
    * Bank expects RBI to remain on prolonged pause till
December,
while "monetary policy stance is unlikely to change anytime soon
with liquidity conditions remaining comfortable till H1-FY24 and
inflation expected to remain above 4%-target"


($1 = 82.3500 Indian rupees)

 (Reporting by Dharamraj Dhutia)
 ((dharamraj.dhutia@tr.com))