India 10-Year Yield Climbs Past 8% for First Time Since May 2015

India’s 10-year bond yield climbed above 8 percent at the start of trade Friday for the first time since May 2015 amid concern about quickening inflation and the government’s budget deficit.

The Reserve Bank of India raised interest rates on Wednesday for the first time in four years. The nation’s sovereign debt is heading for a third month of losses as state banks, the biggest holders of the securities, stay away from active participation amid losses.

“Sentiment in the bond market is somewhat fractured as a lot of large participants are not participating, while the supply is high,” said Sandeep Bagla, associate director at Trust Capital Services India Pvt. “Unless Brent comes down a lot or state banks start participating, it’s difficult to contain yields purely on fundamental grounds.”


The yield on the 7.17 percent bond due in January 2028 climbed as high as 8.03 percent before falling back to be three basis points down on the day at 7.96 percent. The rupee declined 0.5 percent to 67.48 per dollar.

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