India corpbond yields ease on slowdown in fresh supplies

MUMBAI, Sept 1 (Reuters) - Indian corporate bond yields eased on Wednesday, as a mere trickle of fresh supplies kept trade shallow.

Traders said volumes might pick up next week when Power Finance Corp's about 10 billion rupees worth of bonds hit the market [ID:nSGE6800AB], probably followed by Rural Electrification Corp, which might also look to issue.

The yield fixing on the Reuters benchmark five-year corporate bond AAAIN5Y= was at 8.52 percent, 3 basis points lower than Tuesday's 8.55 percent.

The spread between the five-year corporate bond and government bond narrowed to 64.60 basis points from 69.32 basis points.

The yield on the benchmark 10-year federal bond IN078020G=CC ended up 3 basis points on the day at 7.96 percent.

An Indian government panel has recommended removing limits on foreigners' purchases of rupee-denominated corporate bonds, which it said would help deepen the debt market without compromising financial stability. [ID:nSGE67U0IR]

India's trade deficit swelled in July to its biggest level in almost two years, putting further pressure on the current account and on the need for India to attract capital inflows to avoid pressure on its currency. [ID:nSGE680054]

ECL Finance's 5.25 percent bonds maturing Oct. 27, 2010, were the most traded, with a volume of 2 billion rupees on FIMMDA.

Total volume traded on Wednesday was 22.79 billion rupees, lower than Tuesday's 28.56 billion rupees. The data is sourced from the Bombay Stock Exchange, National Stock Exchange and Fixed Income Money Market and Derivatives Association of India. (Reporting by Jeanette Rodrigues; Editing by Sunil Nair)