What do you anticipate will come out of the MPC meeting?? If they cool inflation then short term rates start to dive... They might have peaked today

Inflation numbers expected @14% or thereabout, I reckon MPC will raise by 50-100bp. CBK front running these next 2 auctions before budget reading. Why do i say so?
91-Day tbill auction was for 3B, CBK took all the bids (8B+)... at even 9.25%!!!!
It can only mean the budget numbers we expect will be extraordinary and the gava needs to pick this up before the budget...

If I were a bank I wouldn't raise lending rates on existing loans to avoid NPLs. 2. I would neither raise deposit rates to maintain my cost of funds. 3.I would keep lending although cautiously. 4.and most of all be very active in govt.debt mkt and with this kinda rates i'd make a KILLING!

on the NSE site I see a price of 81.30 for this bond, meaning a yield to maturity of about 15% ... is that price real or is the market illiquid ?

@Gaudente,

It could be both.

On one hand, the market is trying to avoid placing funds in long term investments...which is a common thing at this time of our country i.e. at least 18 months before the election.

In looking at the latest yield curve (i.e. as at 5 August 2011), I notice that there is no difference between the yield for a 25 year and 30 year bond. That tells you how much investors are being cautious.

On the other hand, I believe that the price could be about right for such kind of durations. Its really not about the investment being illiquid but how much risk (or its perception) is being factored for such an investment.

Let me know if you need further clarification.

Regards