Shortest ruling 10-year benchmark bond ever: Changes within three months

Bond dealers say such quick benchmark setting can create some confusion in the markets on rate setting

The government has introduced a new set of benchmark 10-year bonds, within 10 months of raising a new one, as record borrowings have made the discipline of not bunching up redemption difficult to implement.

In Friday’s auction, the government introduced the new 10-year bond, at a yield of 5.77 per cent, and raised Rs 18,000 crore from it. The security issued in May had a cut-off coupon of 5.79 per cent, and is also the most traded in the market because of its liquidity. This is the shortest ruling benchmark ever, and the government may have to increase its redemption