Borrowing Costs for Indian Firms Jump on Steps to Drain Cash
- Yield on BBB rated rupee bonds set for biggest jump since 2018
- RBI absorbs excess liquidity via an auction on Friday
The Reserve Bank of India plans to absorb 2 trillion rupees from the local banking system via a 14-day reverse repurchase auction on Friday, according to the central bank.
Photographer: Dhiraj Singh/BloombergThis article is for subscribers only.
The Reserve Bank of India’s move to drain excess cash from the financial system may have inadvertently ruined the debt party for the nation’s weaker borrowers.
Average yields on three-year rupee bonds rated BBB have risen 28 basis points this week through Thursday, on track for their biggest weekly increase since 2018, according to data compiled by Bloomberg. Borrowing costs for top-rated issuers have climbed by a similar amount, but they generally have greater access to funding than weaker peers.