Sovereign bonds slide as RBI's choice of purchase papers disappoint

Underwriters had to rescue nearly the entire Rs 11,000 crore ($1.5 billion) of the 5-year bond at last week's sale.

India’s sovereign bonds slumped as the Reserve Bank of India’s choice of relatively illiquid papers for its bond-purchase programme disappointed traders. Surging global oil prices also weighed on sentiment.

The yield on the 5.63 per cent bond maturing in 2026 rose as much as 13 basis points (bps) to 5.89 per cent, while the 6.64 per cent 2035 bond yield climbed 8 bps. The benchmark 10-year yield advanced nine basis points to 6.18 per cent, its biggest jump in nearly three months.

“The choice of illiquid papers has disappointed traders,” said Debendra Dash, head of fixed income at AU Small Finance Bank