Spreads have narrowed further as the market s terminal rate expectations might have changed with the RBI keeping the policy rate unchanged and inflation easing, say fund managers
The Reserve Bank of India (RBI) decided not to sell 10-year bonds on Friday’s auction, possibly because it was not happy with the bid. The rejection of the bids brought down yields by 2 basis points and the 10-year bond closed at below 6 per cent again, at 5.99 per cent. The RBI had scheduled to auction Rs 14,000 crore of bonds on Friday’s auction. The underwriters were paid for the auction, but the RBI decided not to sell to them either. The auction was part of a Rs 26,000 crore primary auction. On Friday s auction, the central bank also introduced a new 3-year bond at 4.26 per cent.
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