Mumbai, Oct 07: The twin gilts auction of government of India dated securities for a notified amount of Rs 5,000 crore sailed through smoothly amidst tight liquidity condition without devolving on Reserve Bank of India or primary dealers. The RBI pegged the yield of the eight-year paper at 11.35 per cent while the 19-year paper was pegged at 12.04 per cent.With the completion of the twin-bond auction, the centre has completed 81 per cent of its gross budgeted borrowing for the current fiscal. Out of the gross borrowing of Rs 84,014 crore for the current fiscal, the centre has finished raising Rs 68,130 crore.
According to the RBI, both the papers were oversubscribed. While the 11.90 per cent 2007 paper was oversubscribed by Rs 1,272 crore and 12.6 per cent 2018 paper received Rs 1,455 crore more. The central bank fixed the cut-off price at Rs 102.71 for the 2007 paper.
The cut-off price of 2018 paper was pegged at Rs 104.05 offering an implicit yield of 12.04 per cent.According to market sources, the yield pegged for both the papers were much higher than existing yield of the papers in the secondary market as bullishness from the money market has diminished.
In the secondary market, the eight year paper is currently trading at Rs 102.88 and the 19 year paper at Rs 104.26.
For the 2007 paper, the central bank received 156 bids worth Rs 4272.205 crore out of which it accepted 127 bids for Rs 3000 crore. For the 2018 paper, the central bank received 139 bids worth Rs 3,455 crore of which it accepted 120 bids worth Rs 2000 crore.
According to money market dealers, liquidity is expected to remain tight throughout the week as no major inflows are expected to come into the system. On Friday Rs 600 crore is expected to come into the system through T-bills redemption, interest payment on a few securities and quarterly interest on cash reserve ratio.
Both the government securities market and call market were subdued on Thursday despite twin gilts auction. Indian government securities were stable in early trade on Thursday and dealers said the Moody's upgrade of the foreign and currency debt ratings had improved sentiment but the day's bond auction was likely to keep a check on a rally.
Overnight rates softened to close at 10-10.25 per cent on Thursday. Opening the day 11-11.25 per cent from its last close at 10.50-11 per cent, call rates declined by close on good inflows and reduced demand for funds. Gilt prices firmed up by 2-3 paise during the day. The 11.90 per cent 2007 bond seen at Rs 102.87 (Rs 102.90) with 11.75 per cent 2006 was at Rs 102.60 levels (Rs 102.64).
Copyright © 1999 Indian Express Newspapers (Bombay) Ltd.