- Unstable global interest rate expectations and domestic fiscal uncertainty explain investors’ preference for SRBI over other long-term instruments, resulting in sell-off pressure in the SBN market but not the shorter end of the domestic debt market.
- Despite the lower demand from foreign investors and banks, the SBN market may find more ready buyers from the household sector, given retail investors’ now higher sensitivity to nominal rates.
- Rather than the SRBI, retail investors’ shift towards higher-yielding SBN may better explain banks’ slowing deposit growth, which could be exacerbated if the government decides not to spend the proceeds from the SBN issuance.
