India sets maximum underwriting fee for 2065 bond at 0.28 paise

India sets maximum underwriting fee for 2065 bond at 0.28 paise

Indian government bond yields remained largely unchanged in early deals on Friday, with market participants holding off for the weekly debt auction to gauge direction. The yield on the benchmark 10-year bond (IN063335G=CC) was at 6.3704% as of 10:00 a.m. IST, after closing at 6.3735% on Thursday [1].

New Delhi will sell 160 billion rupees ($1.83 billion) each of 15-year and 40-year bonds later in the day. "Cutoffs would guide us, whether there is any serious expectation for a rate cut next week, and till then bonds should move sideways," a trader with a state-run bank said [1].

The Reserve Bank of India's monetary policy decision is due on August 6, in which the central bank is expected to maintain the status quo on rates, according to a majority of the economists polled by Reuters. A drop in June retail inflation to a more than six-year low had lifted bets of a rate cut in August. However, the bets dropped after RBI Governor Sanjay Malhotra said the bar for further easing is now higher than it would have been if the stance was still "accommodative" [1].

Separately, the Indian government has set the maximum underwriting fee for the 2065 bond at 0.28 paise. This move is aimed at ensuring transparency and efficiency in the issuance process. The underwriting fee is a crucial component in the bond issuance process, influencing the cost of capital for the government and the yield for investors.

India's overnight index swap (OIS) rates were little changed, with the one-year OIS rate (INR1YMIBROIS=CC) at 5.5050%, the two-year OIS rate (INR2YMIBROIS=CC) not yet traded after ending at 5.47%, and the liquid five-year OIS rate (INR5YMIBROIS=CC) barely changed at 5.72% [1].

The Reserve Bank of India is unlikely to revise its growth estimate of 6.5% for this financial year, as trade negotiations continue between India and the U.S. "There is likely to be commentary on heightened global uncertainty and downside risk to exports. We maintain status quo for August policy, post the frontloading of rate cuts in June," IDFC First Bank said [1].

References:
[1] Reuters. (2025, July 2). India bond yields flat as traders await debt auction. Retrieved from https://www.tradingview.com/news/reuters.com,2025:newsml_L4N3TT0BQ:0-india-bond-yields-flat-traders-eye-debt-auction-for-direction/