RBI issues fresh 10-year bond, yield 6.32% at close

Synopsis

Bond yields declined after the RBI announced buying back government securities worth ₹1.25 lakh crore in May, lifting sentiment, while the large quantum took market participants by surprise.

Mumbai: The Reserve Bank of India (RBI), on behalf of the government, issued a new 10-year paper Friday for a coupon of 6.33%, which will replace the existing benchmark bond in coming weeks.

The new paper ended at 6.32% on Friday and was the second-most traded security, CCIL data showed.

The benchmark 10-year bond yield ended at 6.35%, nearly unchanged from its previous close.

"The new bond had a cut off on expected lines with decent demand. The new paper will however take a few more auctions to be the benchmark bond," said a bond trader at a primary dealership.

The next 10-year auction is scheduled on May 30.

Bond yields declined after the RBI announced buying back government securities worth ₹1.25 lakh crore in May, lifting sentiment, while the large quantum took market participants by surprise.

However, geopolitical tensions between India and Pakistan could cause yields to head north again, dealers said.

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