The government is slated to sell 200 billion rupees When India kicked off its record-borrowing plan last week, traders were betting that the central bank would step in quickly to ease the debt burden.
As another auction looms, they’re now bracing for disappointment. The government is slated to sell 200 billion rupees ($2.6 billion) of bonds on Friday.
Its first auction of 190 billion rupees was unexpectedly fully subscribed as investors bought on expectations that the Reserve Bank of India would purchase more debt in the secondary market to cap yields. “Every successive auction will see less demand in a market that’s completely dislocated" if the RBI doesn’t step in, said Vijay Sharma, executive vice president for fixed-income at PNB Gilts