By Anoop Agrawal Aug. 6 (Bloomberg) -- India’s 10-year bonds were little changed, with yields on the current benchmark at a three-week high, before a 120 billion rupee ($2.5 billion) auction of securities tomorrow. The nation’s bonds are the worst performing so far this year among 10 local-currency debt indexes compiled by HSBC Holdings Plc as the government sells record amounts of debt to fund stimulus spending. Trading volumes were lower than normal today because of a strike by bank workers, according to Devendra Das, a fixed-income trader at Development Credit Bank Ltd. “The strike has taken away the opportunity to adjust portfolios before the sale,” Mumbai-based Das said. “Since the undertone is bearish, yields are still rising.” The 6.9 percent notes due July 2019 yielded 7.09 percent as of 1:46 p.m. in Mumbai, according to the central bank’s trading system. The price dropped 0.02, or 2 paise per 100 rupee face amount, to 98.64. A basis point is 0.01 percentage point. The government will offer 40 billion rupees of 6.49 percent bonds due 2015, 60 billion rupees of 6.9 percent notes due in 2019 and 20 billion rupees of 7.4 percent securities maturing in 2035 tomorrow. More than 900,000 bank workers, who are seeking higher wages, started a two-day strike today, C.H. Venkatachalam, convener of the United Forum of Bank Unions, said in a phone interview from the southern city of Chennai. About 26 state-run lenders, 10 private banks and some workers at eight foreign banks are expected to participate, he said. Bond trading volumes may have declined 80 percent, Das at Development Credit Bank estimated. They averaged 75.5 billion rupees in the past three days, according to the Clearing Corp. of India Ltd., the company that guarantees bond deals. The cost of five-year interest-rate swaps, derivative contracts used to guard against fluctuations in borrowing costs, rose. The rate, a fixed payment made to receive floating rates, climbed to 6.43 percent from 6.34 percent yesterday. To contact the reporter on this story: Anoop Agrawal in Mumbai at aagrawal8@bloomberg.net.

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