States' Increased Borrowing Weakens Bonds, RBI Proposes Credit Derivatives Reform

• Indian bond markets opened lower due to a larger-than-expected state bond auction announcement.
• Fourteen states plan to raise ₹486 billion through bonds on February 10, the highest since March.
• RBI released a draft regulatory framework for credit derivatives, credit indices, and total return swaps on corporate bonds.
• The draft proposes eligibility rules for market participants, allowing non-retail users with ₹10 billion turnover to offer products.
• FPIs may participate in futures on credit indices, and banks can act as market makers for total return swaps.