India Partially Cancels Government Bond Auction as Yields Rise
5paisa Capital Ltd
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Last Updated: 11th September 2026 - 05:03 pm
The Reserve Bank of India accepted less than half of the planned amount at an auction of a shorter-duration government bond on September 11, marking the first such partial cancellation in about a year.
Invest in Indian Markets and Unlock Future Potential With 5paisa!For the 6.20% 2029 government bond, the RBI accepted bids worth ₹45.06 billion against the planned ₹110 billion. The amount taken up was just over 40% of the borrowing scheduled through the security.
The decision came at a time when Indian bond yields have been moving higher, with rising oil prices and a renewed increase in global interest-rate expectations putting pressure on the market.
Three-Year Bond Yield Rises 25 Basis Points in Four Weeks
The 6.20% 2029 bond was dealt at a yield of 6.4566%. That represents an increase of 25 basis points over the four weeks since the security was issued.
A Reuters poll ahead of the auction had put the expected cut-off yield at 6.45%.
The outcome was different for the other securities offered at the auction. The seven-year bond was sold at a yield slightly above expectations, while the cut-off yield on a new 30-year bond was in line with estimates.
Oil and Global Rates Add Pressure to Bond Market
The rise in domestic yields has coincided with another escalation in the Middle East, which has pushed oil prices higher.
Developments in the US have added to the pressure. Recent economic data strengthened expectations of a Federal Reserve rate increase the following week, taking the US 10-year Treasury yield close to 5%.
Against this backdrop, the RBI chose not to accept the full ₹110 billion planned through the three-year security rather than complete the auction at the yields being demanded.
The last time the RBI cancelled an auction of a government security was in October 2025, when investors had sought substantially higher yields.
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