Mumbai: Yields on 10-year bond rose on Wednesday to the highest in almost three weeks on speculation that investors will sell some of their holdings to make room for buying at a government debt sale scheduled for Thursday.
The government will auction debt worth Rs8,000 crore as part of its borrowing programme for the fiscal year ending 31 March.
Bonds also fell on concern that investors will demand higher yields as the new apex bank—Reserve Bank of India— regulations require lenders to keep aside more cash as reserves from 10 November, reducing funds available to buy debt.
Yield on the 7.99% note due July 2017 rose to 7.9% at close, according to the apex bank’s trading system. That is the highest since 18 October. The price per Rs100 face amount fell 0.01 to 100.60.
The government proposes to raise Rs59,000 crore by selling bonds in the second half of the current fiscal year.