15yr Paper Partially Devolves On Pds

The Reserve Bank of India (RBI) today set a spread of 34 basis points over the base rate at the auction of a 15-year floating rate paper maturing in 2017.

The bond was not fully sold and devolved on primary dealers (PDs) to the extent of Rs 1,150 crore against a notified amount of Rs 3,000 crore.

For the Rs 4000 crore 7.55 per cent eight-year paper multi-price auction, the RBI set a cut-off price of Rs 101.46, translating into a yield of 7.3 per cent. It was fully subscribed. A multiple-price auction was held of the 2010 bonds. Dealers were expecting a cut-off yield of around 7.28 per cent for the 2010 paper.

The base rate for the floating rate bond is the average implicit yield of the last six 364-day treasury bills auctions held before the start of each half-year (July and January) coupon payment period.

The dealers expected a spread between 45 basis points and 50 basis points over the base rate. For the first half year, which ends on January 1, 2003, the base is 6.5 per cent, according to the RBI. The RBI today extended the deadline for bond trading on the negotiated dealing system to enable deals to be struck after it announces the results of two bond auctions. The dealing hours extended to 7 pm beyond the normal practice of 5:30 pm.

Ahead of today