PSU bonds issues hit pause as yields rise despite rate cut

tenor government borrowing kept pressure firmly on the yield curve,” said Venkatakrishnan Srinivasan, founder and managing partner at Rockfort Fincap LLP.

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“IRFC’s decision to withdraw the issue was therefore not a retreat, but a statement of market discipline since accepting materially higher yields would have undermined the credibility of the earlier tranche, unsettled existing investors and distorted price discovery for a still-nascent ZCB segment,” he added.

A zero-coupon or deep-discount bond is a security sold at a discount of over 20% from its face value. IRFC had received special approval from the government in May to issue ZCBs worth ₹10,000 crore.