The central bank will offer Rs 9,000 crore worth of such sovereign securities in the primary market sale, RBI said in a release on Monday.
The new paper will be traded in the When Issued market, a platform to discover prices before the formal auction takes place on Friday.
The incumbent benchmark bonds have reached an outstanding stock of about Rs 1.21 lakh crore. It has climbed nearly 100 basis points in the past one year amid fears that the government will fail to attain fiscal deficit target.
A benchmark bond yield is crucial for determining borrowing costs for companies that tap the bond market to raise captial
Yields on the benchmark bonds could surge by as much as 42 basis points by the end of the next calendar year amid concerns that the augmented federal borrowing can cause the government to miss the fiscal deficit target, shows an ET poll conducted among 18 market participants.
For interest rates, 2018 could well be an interesting year as analysts/ dealers struggle to chart out the policy rate trajectory with sudden spurt in yields.