GSEC YIELD 8 %

Yield on the 10-year benchmark bonds, which breached 8 per cent mark intra-day, is likely to be in the 7.96-7.99 range rest of the week on concerns over liquidity deficit, treasury officials said today. "Present yield level is reflective of the liquidity deficit in the system. Also, there are concerns with regard to the replacement of new tenure benchmark with old ones, which is contributing to the rise of the yield," IDBI Bank treasury head N S Venkatesh told PTI. He also said the yield on 10-year benchmark bond is likely to be range bound in the next 2-3 trading sessions with a band of 7.95-7.99 level. The yield on the 10-year G-Secs, which touched 8 per cent level intra-day, closed at 7.99 per cent. At present, banks are borrowing an average of Rs 1.2 lakh crore from the liquidity adjustment facility, which is higher than the comfort level of the Reserve Bank. Referring to this deficit seen in the system, Venkatesh said pressure on liquidity would ease as government started spending in the first half of the fiscal. Another treasury official from a mid-size public sector bank said factors like window dressing of balance sheets by banks at the end of the financial year had also contributed to the deficit. The official said that the present level of 10-year benchmark was likely to continue in the near future. The treasury officials also said there is likelihood of open market operations by RBI in the near future to ease the deficit scenario.