MUMBAI, July 2: Even though the yields for the three new securities auctioned on Wednesday were a few basis points higher than the market rate, there were no takers for the new five-year government paper offering 11.75 per cent and the 12-year paper offering an yield of 12.25 per cent on Thursday. However, the market lapped up the three-year gilt offering a high yield of 11.55 per cent. The paper maturing in 2001 was traded above par in the government securities market on Thursday. According to dealers, the three-year paper was traded 12 paise above par at Rs 112. "There was a huge demand in the market for the three-year paper," fund managers said.In the afternoon, the price fell a little and the three-year paper was traded at Rs 105. "There were no takers for the five-year government paper in spite of the high 11.75 per cent yield in the secondary market," market sources said. According to sources, there is no interest for the five-year paper in the market as it expects the interest rates to firm up inthe next few day. Dealers maintained that the market is confused and traders are not taking positions as they expect the interest rates for the medium and long terms to go up.
The interest rate for the five-year paper is expected to move up 50 basis points. For the medium- and long-dated securities, the market is not able to take a view on the interest rate movement. "But the market is decided on the interest rate movement on short-dated security," a dealer said.
The 12-year paper offering 12.25 per cent was lapped up by Life Insurance Corporation. "LIC bought about Rs 902 crore government paper maturing in 2010," a dealer said.
The wholesale debt market of the NSE witnessed trading worth Rs 326.94 crore. The newly issued 11.55 per cent government loan maturing in 2001 was traded for Rs 95 crore at a weighted yield of 11.51 per cent. The 13.62 per cent government loan maturing in 1998 was traded for Rs 15 crore at a weighted yield of 8.41 per cent.
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