Benchmark bonds set to liven up trading

7 November 2011: The uncertainty of which bonds to trade and which bonds not to trade is going out of the market.

The Reserve Bank of India (RBI) introduced a new 10-year benchmark bond in last week’s government bond auction and is introducing a new 13 year bond in this week’s auction. The new 10-year bond, the 8.79 percent 2021 bond, will be the benchmark 10-year bond for the next six months and will replace the old bond, the 7.80per cent 2021 bond, as the market benchmark. The new 13 year bond will replace the well-traded 8.13per cent 2022 bonds as the benchmark. The outstanding issuances of 7.80per cent 2021 bond and the 8.13per cent 2022 bond at `68,000 crore and Rs.71,000 crore, respectively are close to total outstanding limit of Rs.75,000 crore set by the RBI for a single security.

Source: DNA