India's new 10-year bond will likely be issued at ​a coupon above 7 per cent for the first ‌time in two years, as the risk ​of higher inflation and global ⁠market pressures drive funding costs higher, analysts said.

New Delhi will sell 340 billion rupees ($3.57 billion) of ‌a new 10-year paper on Friday. This note will replace the existing 10-year ‌benchmark 6.48 per cent 2035 bond, currently ‌trading ⁠at a yield of 7.05 per cent.

The new paper ⁠traded at 7.00 per cent in when-issued segment of the trading platform.

Assuming crude oil prices remain elevated in $115 to $120 ​a barrel range, upward ‌pressure on yields is likely to persist, Harsimran Sahni, head of treasury at Anand Rathi Global Finance said.

"With the current benchmark ‌yield trading above 7.00 per cent, the coupon on ​the new 10-year issuance is expected to be set in the range ⁠of 7.00 per cent - 7.02 per cent accordingly."

The Reserve Bank of India had last sold a 10-year ‌paper above 7 per cent in April 2024.

Historically, bond traders bid aggressively for a new benchmark bond to bring the security into their portfolio.

"We expect good demand for the new paper as it is a fresh issuance ‌on the current yield curve and does not ​carry any mark to market risks, but the cutoff should be closer ⁠to the current security, said Alok Singh, head ⁠of treasury at CSB Bank.

The outstanding issuance of the 2035 bond currently ‌stands at 2.26 trillion rupees, which is the highest for any 10-year debt to ​date.

Published on May 5, 2026