As Modi govt revises borrowing plan, yields on 5-year bonds move upwards

Bond dealers not very alarmed as this brings to an end the uncertainty on state and government GST compensation drama for now

The yields on the five-year bonds jumped on Friday, but the benchmark 10-year remained relatively calmer after the government announced extra borrowing of Rs 1.1 trillion, to be raised equally in five and three year tenures, to compensate states on good and services tax (GST) shortfall.

Separately, the central bank announced Rs 10,000 crore secondary market purchase of state bonds, it’s first in history, to be conducted on Thursday next week. The open market operations of state development loans (SDL) were announced in the monetary policy to bring down yields of the state bonds so that they can borrow near