Yield on new 10-yr paper hardens by 8 bps over RBI cut-off point

The closing yield for the 2032 govt bond was 6.62% on Monday; RBI cut-off at auction was 6.54%

The yields on new benchmark paper – government bonds maturing in 2032 - hardened by eight basis points over 6.54 per cent, the cut-off point at which the Reserve Bank of India had accepted bids at bond auction.

The closing yield for new benchmark bonds 6.62 per cent on January 17, 2022, according to Clearing Corporation of India data. The bond auction for new paper was held on January 14, 2022 for a notified amount of Rs 13,000 crore.

It received bids worth Rs 24,495 crore but RBI made partial allotment of Rs 7,555 crore at a cut-off level of 6.54 per cent. There was partial devolvement of Rs 5,442 crore on primary dealers (PDs). RBI had accepted Rs 13,000 crore of underwriting from PDs.

The yield on old benchmark (6.1 per cent 2031) at close were 6.63 per cent.

According to the State of Economy report in RBI’s monthly bulletin (January 2022), bond yields ruled higher, with the 10-year G-sec (old) yield hovering at near two year high levels and closing at 6.58 per cent on January 14, 2022.

Global cues, viz., indication of a faster reversal of accommodative stances by major central banks like the unexpected hike by the Bank of England, rise in US treasury yields and higher crude oil prices dented sentiments and pushed up yield levels.

In the domestic primary segment, there were higher yield cut-offs, coupled with devolvement on PDs in the weekly auction on December 24, 2021, January 7 and 14, 2022.