The Reserve Bank of India (RBI) set a coupon rate of 7.26% on new 10-year benchmark government bonds due in 2033 on February 3, raising Rs 12,000 crore.

The coupon setting for the new benchmark bond is similar to that of the previous 10-year benchmark bond.

The 10-year benchmark government bond is the pricing benchmark for the sovereign bond yield curve and is typically the most liquid note in the secondary market for government debt.

Government bonds are the pricing reference for various economic credit products, including corporate debt.

Ahead of this auction, the RBI has set an additional competitive underwriting (ACU) commission cut-off rate of 12 paise for the 2033 new government bonds.

When the unofficial limit for specific security typically reaches Rs 1.5 lakh crore, the RBI announces new bonds of similar maturity.

The existing 10-year benchmark bond is currently yielding 7.2887%, up almost 12 basis points since the budget was announced.

Yields fell after the government announced lower-than-expected borrowing figures for next year.

The centre will borrow a record Rs 15.43 lakh crore from the market in 2023-24 to finance its fiscal deficit of 5.9% of gross domestic product.

On a net basis, the centre’s borrowing is pegged at Rs 11.8 lakh crore next year, up from Rs 11.19 lakh crore in 2022-23.