RBI repo rate cut: Bond markets cheer timely intervention

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Published: March 28, 2020 2:15:58 AM

Earlier, yields fell across instruments by anywhere between 150-280 basis points while the benchmark yield fell by 8 basis points to close at about two-week low of 6.14%.

Unlike the US Fed or the ECB, the RBI did not announce direct purchases of CPs or corporate bonds.Unlike the US Fed or the ECB, the RBI did not announce direct purchases of CPs or corporate bonds.

The bond markets celebrated on Friday after Reserve Bank of India (RBI) slashed the repo by a hefty 75 basis points and launched a Rs one lakh crore line of credit for lenders to be used to buy investment grade corporate bonds, NCDs and CPs. The first of the targeted long term repo operations (TLTRO) late Friday saw a tremendous response with bids worth Rs 60,500 crore coming in against a notified amount of Rs 25,000 crore. Dealers said the coupon, for the three year tenor money, would have been close to the new repo rate of 4.45%, since the RBI had announced the money would be lent at a floating rate, linked to the policy repo rate. Unlike the US Fed or the ECB, the RBI did not announce direct purchases of CPs or corporate bonds. However, banks can buy investment grade paper from mutual funds and NBFCs.

Earlier, yields fell across instruments by anywhere between 150-280 basis points while the benchmark yield fell by 8 basis points to close at about two-week low of 6.14%.

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