Home / Business and Economy / India Bonds Yield Above 7% for First Time in 2 Years
India Bonds Yield Above 7% for First Time in 2 Years
5 May
Summary
- New 10-year Indian bond to be issued above 7% coupon.
- This is the first time in two years yields have surpassed 7%.
- Crude oil prices are a key factor driving yields higher.
India is preparing to issue a new 10-year bond with an anticipated coupon rate above 7%, a threshold not crossed in approximately two years. This issuance on Friday aims to raise 340 billion rupees and will replace the current 10-year benchmark bond, which is already trading at a yield of 7.05%. The new paper was observed trading at 7.00% in pre-issuance markets.
Analysts attribute the rising yields to persistent upward pressure from factors like elevated crude oil prices, which are projected to remain between $115 and $120 a barrel. This environment suggests continued increases in borrowing costs for the Indian government. Despite these pressures, demand for the new benchmark bond is expected to be robust, as is typical for such issuances.
The Reserve Bank of India last auctioned a 10-year paper above 7% in April 2024. The current outstanding 2035 bond has reached 2.26 trillion rupees, the highest for any 10-year debt issued to date, underscoring the significant volume of debt in this maturity.
