The G-Sec bond yields were steady after the announcement of government borrowing programme for FY11. The 10-year benchmark bond yield ended at 7.89%. Even shorter term yields were flat; except for 2-year G-sec that declined by 30bps this week.
Corporate bonds prices witnessed some rally as bond yield corrected. 10-year AAA bond yield was down by 4bps at 8.88%.
Government announced a lower-than-expected borrowing programme of Rs4.57tn for FY11. The net borrowing is expected at Rs3.45tn in the year v/s Rs3.97tn in FY10.
Food price inflation index fell to 17.58% for the week ended Feb 13 vis-à-vis 17.97% in the previous week. Prices of pulses, vegetables and sugar continue to remain on higher side.
Government would infuse Rs165bn to ensure the minimum Tier-I capital of 8% by March ‘11 into PSBs. Of this, Rs150bn would be aided from World Bank, as the institution had agreed to provide a US$2bn loan for re-capitalizing government-owned banks.