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[Indian Bond Market Calls to Government: More Buybacks, or Yields Won't Come Down] ⑴ Indian bond market participants say the market needs further support, particularly through buyback operations, to significantly lower yields after government bonds rose following an unexpected debt swap. ⑵ On Friday, the yield on the benchmark 10-year government bond was 6.6878%, nearly 5 basis points higher than the intraday low reached after the announcement that the government would swap 755 billion rupees of its holdings of long-term notes with the central bank for bonds maturing next year. The swap is part of the government's debt management strategy, and the latest operation reduces debt servicing and borrowing needs for the next fiscal year. ⑶ Concerns about a supply-demand imbalance in the bond market have pushed the 10-year yield to levels seen more than a year before the central bank began easing policy. VRC Reddy, head of treasury at Karur Vysya Bank, said supply is a major concern in the current environment, and the government should conduct buybacks if there is a cash surplus, which would alleviate borrowing pressure next year. ⑷ Weak investor demand and a large supply have led to rising bond yields, diminishing the economic impact of a significant policy rate cut. The central bank's record bond purchases have failed to calm the market. (5) Murthy Nagarajan, head of fixed income at Tata Mutual Fund, predicts the 10-year yield could rise to 6.80% by March. Abhishek Upadhyay, senior economist at ICICI Securities Primary Dealership, points out that the spread between 10-year bonds and policy repurchase rates has widened from 15 basis points a year ago to over 150 basis points. (6) Upadhyay believes that unless the government uses its cash balance to repurchase some of its 2027 fiscal year bonds now, market sentiment is likely to remain negative. He expects the 10-year benchmark bond yield to trade in the 6.70%-7.00% range in the short term.