India partially cancels debt sale for first time in a year as rates spike

According to Business Recorder, the Reserve Bank of India scaled back a government debt auction on Friday, traders said, in an effort to stop bond yields from climbing further. The central bank accepted bids of only 45.06 billion rupees ($471.12 million) against a planned 110 billion rupees for the 6.20% 2029 paper, which is slightly more than 40% of the target. Market participants read the move as an early sign of how Indian authorities view interest rates.

The seven-year bond was sold at a yield slightly above expectations, whereas the new 30-year paper cleared at a cutoff in line with forecasts. A Reuters poll had pointed to a cutoff of 6.45%, while the 6.20% 2029 bond yield traded at 6.4566%, a 25 basis point rise since its issuance four weeks earlier.

Oil prices have climbed after fresh military escalation in the Middle East, adding upward pressure to yields that have already risen in recent weeks. Strong US economic data has also boosted bets on a Federal Reserve rate hike, lifting the 10-year Treasury yield toward 5%. The RBI's previous cancellation came in October 2025, when investors were demanding much higher yields.