Yields on state govt bonds harden ahead of RBI policy announcement

Bond dealers said the hike in yields on state government paper was in line with the increase across the board - treasury bills, Government of India (GoI) bonds, and corporate paper

The yields on state government bonds at Tuesday’s auction hardened by 8-15 basis points (bps). This comes a day ahead of a review by the Reserve Bank of India’s (RBI’s) monetary policy committee (MPC), which is widely expected to hike the policy repo rate.

According to the RBI data for the 10-year paper, the cut-off was 7.89 per cent, against about 7.81 per cent last week. Also for the 12-13-year maturity corridor, it was 8.03 per cent on Tuesday, compared with 7.87 per cent last week, according to the RBI and ICRA data. The Maharashtra government was the only state to