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Nomura Sees Rates Backfiring on Auction-Flop Costs: India Credit

The Reserve Bank of India’s surprise policy reversal and the first government debt-sale failures in 10 months prompted Nomura Holdings Inc. to warn that plans to cut the budget deficit are at risk.

Underwriters had to pick up 24 percent of the 150 billion rupees ($2.5 billion) of bonds offered at a July 19 auction after demand fell short. India didn’t sell any of the 120 billion rupees of bills it offered on July 17 and, a day earlier, state governments met only 26 percent of their borrowing target at a separate sale. Demand slumped after the RBI raised two of its interest rates on July 15 to arrest a slide in the rupee.