Government rolls out new 10-year gilt at 6.1% – Times of India

MUMBAI: The RBI on Friday issued the new benchmark government bond, the 10-year paper maturing in 2031, at a yield of 6.10%. This is 25 basis points (100bps = 1 percentage point) higher than the previous one issued in December 2020. The ‘when issued’ segment of the RBI’s bond trading platform too indicated the yield will be set at that level.
As the name of the segment suggests, the RBI allows market players to trade bonds that are to be issued in the next few days.
The new 10-year bonds started trading in this segment on July 5, the day the government announced it would introduce a new benchmark gilt. Issuance of the new benchmark bond at a higher yield indicates the central bank’s willingness to accept the increased level.
During the day, the RBI also announced that all states would together borrow nearly Rs 1.9 lakh crore in the current quarter ending September 30. This is about Rs 20,000 crore more than what was announced earlier.
Bond dealers said that this extra amount of borrowing could put extra pressure on yields in the coming months. This, in turn, could also put some upward pressure on yields across the bond market, they added.