RBI: Govt to buy back bonds worth Rs 40,000 crore; move to ease tight liquidity

The unexpected move is also seen bringing down yields on short-term government bonds, as the three securities that the government has chosen to buy back are all maturing within six to nine months. A fall in government bond yields brings down cost of borrowing for companies as pricing of corporate bonds is benchmarked to sovereign debt. A bulk of corporate borrowing is through short-term papers.

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