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

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,