So the bond auction did fail. We mentioned this earlier today. It didn’t fail by too much, though; just 890 cr. that devolved. However the yields at which these bonds have been sold are substantially higher than earlier – three of the four bonds went at 8%+.
The RBI must have rejected bids beyond 8.15% as they were too way off the curve.
A devolvement is an early sign of some distress in the bond market. Sometimes it’s a one-off. But seeing this happen twice in two weeks is a red flag. There is going to be some serious drama in the bond market soon.