RBI steps in to revive long-term bond market with big buys
The Reserve Bank of India (RBI) is set to buy ₹1 lakh crore worth of government bonds this December, including a 25-year bond—the longest it's ever picked up in such operations.
This move comes as demand for India's ultra-long-term bonds has been pretty weak, even though the government wants to sell ₹127,000 crore in 30-to-50-year bonds from December to March.
Why does this matter?
Long-term bonds usually attract insurers and pension funds, but lately, they haven't been biting—so yields have actually gone up despite RBI's earlier efforts.
By buying these extra-long bonds now, the RBI hopes to pump some life (and cash) back into the market and bring those yields down a bit.
Right after the announcement, yields on 30- and 40-year bonds dropped slightly—a sign that investors are paying attention.