Low availability of paper, rising interest rate dampen mood in bond market

RBI has issued just Rs 28,000 cr worth of 10-year bonds, cancelling a Rs 14,000 cr auction last Friday in a move being seen as intervention, which bond dealers say did not go well last time

Low availability of bonds and rising interest rate has again made the 10-year bond thinly traded in the market, shifting the market interest to other benchmarks.

The Reserve Bank of India (RBI) has issued just Rs 28,000 crore of this paper, cancelling a Rs 14,000 crore auction last Friday. Refusal to sell the bond on Friday’s auction is being interpreted as intervention in the 10-year segment, which the bond dealers say did not go well last time.

The RBI had bought most of the last benchmark from the market, hoping to keep the yields contained. However, the market made the