Yield on 10-yr state govt bonds eases by 26 bps after RBI's intervention

The weighted average cut-off for the 10-year SDLs eased by a sharper 26 bps to 6.63 per cent on October 13, 2020 over the previous weekly auction

The yield on 10-year state government loans (SDL) eased by 26 basis points at auction, showing the effect of Reserve Bank of India’s (RBI’s) steps to enhance liquidity for these bonds. 

The weighted average cut-off for the 10-year SDLs eased to 6.63 per cent on October 13, over the previous weekly auction. 

On October 9, the RBI unveiled measures to provide liquidity, boost dem­and for government bo­nds, and cool SDL spre­ads. The central bank will also conduct Open Market Operations in SDLs. This subsequently led to a decline in the G-Sec yields and SDL cut-offs.

Rating agency ICRA said state governments raised Rs