Sunday 23 January 2022
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Bond yield spikes as RBI’s purchase disappoints

The benchmark 10-year bond yield elevated on Thursday to its highest level in a week as the outcome of the first tranche of the Reserve Bank of India’s bond-purchase programme disappointed traders while inflation concerns also weighed.

The 10-year bond yield ended at 6.13%, its highest level since April 7, and 12 basis points higher than its previous close.

The Reserve Bank purchased ₹250 billion worth of bonds under G-SAP or government securities acquisition programme, under which it has committed to buying ₹1 trillion worth government paper between April and June to aid the absorption of the Centre’s massive ₹12.06 trillion borrowing in FY22.

“Traders were hoping the RBI would buy more of the 10-year paper,” said a senior trader at a private bank. “It bought only ₹75 billion of that bond versus expectations of nearly double that amount,” the trader added.

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