Mumbai: Indian federal bond yields inched higher on Tuesday after an increase in this week’s bond auction to 50% more than its scheduled size triggered concerns that government borrowing could still be larger than expected.

At 11:42am (0612 GMT), the benchmark 10-year bond yield was at 7.13%, above Friday’s close of 7.09%. The market was shut on Monday for a holiday.

“Size of the auction this week is higher than expected. Also, some investors seem to be reducing their positions ahead of the second-half calendar,” said Premanand Kamath, treasury head at Corporation Bank.

A finance ministry official said last week the government will stick to its full-year borrowing plan of Rs4.51 trillion and the borrowing calendar for October to March would be released on 29 September.

If government planned to complete its borrowing needs well ahead of the end of the fiscal year, the market might react negatively on fears additional borrowing may be announced, traders said.

Apart from Friday’s Rs120 billion bond auction, state loans worth Rs91.5 billion are to be auction on Tuesday and the central bank will sell Rs60 billion of treasury bills on Wednesday.

Dealers said the rise in yields could be capped by expectations the central bank would not starting tightening policy for some time, and on expectations that accounting rules on hold-to-maturity accounts could be changed for banks, which would support demand for debt.

Volumes were a moderate Rs31.35 billion ($0.65 billion) on the central bank’s trading platform.

The benchmark five-year interest rate swap edged up to 6.64/67% from Friday’s close of 6.58/63.