WHY IT MAY NOW BE A GOOD TIME FOR DEBT INVESTMENTS

For investment in debt instruments, you can purchase them directly, or you can invest in debt funds.

- JOYDEEP SEN

The relevant parameter is yield-to-maturity or YTM. This is the annualized return you will earn, provided you hold the bond till maturity. The higher the YTM at the entry level, the better for you.

In the current context, The Reserve Bank of India (RBI) cut the signal repo rate from 6.5% to 5.5% between February and June 2025. Yields fell, boosting existing bond prices, but YTM declined as price and yield move inversely. Recently, yields have risen again, offering a better entry point. The 10-year government bond yield, at 6.2% in May, is now 6.51%, while the 30-year yield has climbed from 6.75% in April to 7.2%.

Where is the opportunity?

The government bond yield curve is the base or reference point for yield levels on other bonds.