RBI turns down every bid in Rs 23,000 crore Treasury bill auction amid soaring yields

On Wednesday the Reserve Bank of India refused all applications in a Treasury bill auction intended to raise Rs 23,000 crore across three maturities, signalling unease with the sharp increase in short-term borrowing costs. Traders noted that the yields investors required were higher than the RBI anticipated, leading to a complete bid rejection. The move added pressure to government bonds already under strain from higher crude oil prices and rising US Treasury yields, lifting the 10-year benchmark yield to 7.44%, the highest since early November 2022.

Recent auctions had seen yields of 5.73% for 91-day bills, 6.29% for 182-day bills and 6.49% for 364-day bills. The spread between the 364-day bill yield and the RBI’s policy repo rate widened to 99 basis points, its widest in four years, as the central bank continues a hawkish tightening stance.