RBI refuses to sell another batch of 10-year bonds at market ask

This is the third straight auction of 10-year bonds that has devolved, leaving the market perplexed

The Reserve Bank of India (RBI) on Friday refused to sell 10-year bonds at the yield demanded by investors, choosing to devolve the benchmark’s auction for the third time in a row instead. 

When underwriters of bonds, mostly primary dealers, are forced to buy the unsold bonds, it is called devolvement.

The central bank had planned to sell Rs 18,000 crore of 10-year bonds on Friday. This was part of the Rs 30,000-crore auction of four bonds. However, the central bank devolved Rs 17,969.891 crore. The other bonds were sold fully.

Of late, any bond other than the 10-year is