India bonds decline as debt supply caution overpowers oil moves

Business Recorder reported that Indian government bonds slipped on Thursday after a steady opening, as worries over a large upcoming debt sale outweighed the benefit of softer oil prices. The 6.94% bond maturing in 2036 traded at a yield of 6.8619% at 10:30 a.m. IST, versus 6.8488% at Tuesday's close.

New Delhi plans to sell 340 billion rupees ($3.56 billion) of the benchmark paper on Friday, lifting outstanding debt to 1.80 trillion rupees. Traders said concerns about how the auction will go were weighing more heavily than the drop in oil, after policy minutes shifted sentiment. Minutes from the Reserve Bank of India's August policy meeting showed officials were willing to raise rates if inflation risks take hold and spread.

The Reserve Bank's next rate decision falls on October 7, and only one inflation figure will be released before it. Brent fell to roughly $87.4 a barrel, extending a fourth consecutive daily decline, on hopes that talks between Iran and Qatar could reopen the Strait of Hormuz. Ship-tracking figures indicate flows through the strait have fallen to roughly a quarter of their level before the conflict. Lower crude would help large energy importers such as India, since costly oil threatens to push up inflation and strain public finances.