RBI sets 6.79% coupon rate on new 10-year bond

Bonds

The coupon set on the new 10-year bond is over 31 basis points (bps) lower than the current 10-year coupon. The coupon set was also 2 bps lower than current 10-year benchmark bond yield at 1.43 PM.

On the current benchmark bond, the RBI has set 7.10 percent coupon rate and raised Rs 20,000 crore on April 5.

On October 3, Moneycontrol reported that RBI expected to set coupon rate on the new 10-year benchmark bond in the range of 6.72-6.79 percent at its weekly bond auction.

The central bank announced the issuance of the new 10-year bond worth Rs 22,000 crore on September 30.

The yield on the government securities, especially 10-year benchmark bond, has risen 6-7 bps since October 1 when the conflict between Iran and Israel began to worsen.

According to the Bloomberg data, the 10-year benchmark bond 7.10 percent 2034 yield was at 6.812 percent at 1.50 pm against 6.734 percent on October 1.

Experts attributed the surge in yield to the increase in crude prices and US treasury yield.
On October 1, Iran launched ballistic missiles at Israel in retaliation to Israel’s war in Gaza, targeting Houthis in Yemen and Hezbollah in Lebanon.

Israeli Prime Minister Benjamin Netanyahu warned that Iran would “pay for its attack”.
At 1.03 pm, the benchmark Brent crude was trading at $77.74 a barrel, against $73.56 on October 1 and $71.77 on September 30.