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RBI sends signal to traders that bond yields may head higher in debt sale

The Reserve Bank of India sold a 30-year bond on Friday at a cutoff yield of 6.7596 per cent, versus the 6.65 per cent estimated in a Bloomberg survey

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Borrowing costs have already been advancing, with the new benchmark 10-year bond yield jumping more than 30 basis points in the past three weeks.

Subhadip Sircar | Bloomberg

2 min read Last Updated : Aug 24 2020 | 10:31 AM IST

Traders of India’s bonds were unnerved after the central bank cued that rising yields are here to stay by offering surprisingly high borrowing costs at a debt sale.

The Reserve Bank of India sold a 30-year bond on Friday at a cutoff yield of 6.7596 per cent, versus the 6.65 per cent estimated in a Bloomberg survey. The central bank, which acts on behalf of the government for debt sales, also sold another security at a higher yield to raise 20 billion rupees ($267 million) more than planned.

“The RBI’s and bond market’s perceptions of higher yields may differ,” said Arvind Chari,

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