The cost of government borrowing has gone up even as the Reserve Bank of India is ushering in a softer interest rate regime, with the market unwilling to ease yields. This is borne out by the auction of the new 10-year Government Security (G-Sec/GS), conducted by the RBI on Friday.

The 6.48 per cent coupon rate that emerged at the auction of the new 10-year G-Sec is 15 basis points higher than the coupon rate of the current 10-year benchmark paper (6.33 per cent GS2035).

Venkatakrishnan Srinivasan, Founder and Managing Partner, Rockfort Fincap LLP, noted that the new 10-year benchmark bond’s cut-off was at 6.48 per cent, while the outgoing benchmark (6.33 per cent GS2035) was trading at 6.51 per cent.

“Typically, a fresh 10-year should price about 6–8 basis points below the old pape

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