Reserve Bank's silence on record India bond sales leaves traders baffled

The yield on the India's benchmark 10-year bond has stayed around 5.80 per cent since mid-May after falling by more than 70 basis points this year

The Reserve Bank of India’s monetary policy review has come and gone but it’s done little to calm traders’ nerves over an unprecedented government bond supply.

Their patience is running thin as the RBI refrained from taking steps to ease the market’s debt burden at a policy review last week, even as the government plans to sell Rs 12 trillion ($160 billion) of bonds this fiscal year.

“The big question for the market is how this massive borrowing is going to be facilitated when banks are already full to the limit,” said Naveen Singh, head of fixed-income trading at ICICI Securities Primary