January 11, 2018 / 9:20 AM / a year ago

India's fixed income body sets higher levels for Dec-end bond yields

MUMBAI, Jan 11 (Reuters) - India’s fixed income trade body set yields for government bonds at higher levels than the actual closing levels for the October-December quarter, a top official of the market association told Reuters on Thursday.

DVSSV Prasad, the chief executive of the Fixed Income Money Market and Derivatives Association (FIMMDA) said the yields for government bonds had been set at the behest of the Reserve Bank of India.

FIMMDA sets the final closing levels for all the country’s bonds at the end of the quarter, which becomes the benchmark all lenders and financial institutions must use when valuing their portfolio holdings.

Data from FIMMDA published on Wednesday evening showed the yields prescribed by the RBI were set at up to 15 bps higher than the actual closing levels, with the sharp increases tending to impact the more illiquid debt, including the 8.33 percent 2026 and the 6.79 percent 2029 bonds.

“It was a regulatory instruction from the central bank and we, as a valuation agency, followed the instruction,” he said. (Reporting by Suvashree Dey Choudhury; Editing by Rafael Nam)

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