The yield on the new 10-year benchmark bond, that will be auctioned on Friday, is likely to settle close to 7.16%, if levels reflected in the \u201cWhen Issued\u201d market on Thursday are an indication. The Reserve Bank of India will auction the new benchmark securities amounting to Rs 9,000 crore. This will be part of the weekly auction conducted by the RBI in which three other securities will also be auctioned to raise a total of Rs 18,000 crore. The new benchmark bonds started trading in the \u201cWhen-issued\u201d market on Tuesday. The \u201cWhen-issued\u201d market is a platform where investors get to buy the new bond before getting the actual delivery of the securities through the auction. It is a pre-primary market indicative of a conditional transaction in a security authorised for issuance, but not as yet actually issued. On Thursday, seven deals pertaining to the new benchmark bonds were reported on the \u201cWhen Issued\u201d market. A total of Rs 125 crore worth of bonds were traded with the yield levels ranging between 7.160% and 7.165%. According to the latest trade, the yield stood at 7.16%. At all times, a new 10-year benchmark paper elicits strong demand as market participants compete to buy the potentially most liquid security. Given that the 10-year sovereign paper acts as a quasi pricing benchmark for corporate bonds and other instruments, most bond traders bid aggressively to get hold of it. A bond market expert pointed out that the yield on the new benchmark bonds is likely to be in the range of 7.15-7.17% as reflected in the \u201cWhen Issued\u201d market. \u201cThe bonds are expected to receive significant investor interest as everyone wants a pie of the new benchmark. This is reflected in the low underwriting commissions for this bond compared to the other securities that will be hitting the weekly auctions during Friday,\u201d he indicated. According to Thursday\u2019s underwriting auctions, the new benchmark elicited the lowest commission at a mere 0.39 paise. This was less than one-tenth of the lowest commission among the three other papers that are also set to be auctioned on Friday. According to market participants, the new benchmark yield usually witnesses a difference of 15-20 basis points from the running benchmark yield. If the new benchmark yield settles around the 7.16%, this would mean a drop of 17 basis points from the current benchmark yield level.