RBI cancelled most of Friday's G-sec auction

The papers cancelled were the 7.35% 2024, the 7.95% 2032 and the 8.17% 2044

The Reserve Bank of India (RBI) on Friday cancelled the auction of three of the four government securities on auction. The only paper to sail in the auction was the 7.88 per cent 2030 paper. Those cancelled were the 7.35 per cent 2024, the 7.95 per cent 2032 and the 8.17 per cent 2044.

"There was lack of interest due to the Greece problem that has come up. Even we did not participate in the auction. Going forward, people will be a bit cautious due to the uncertainties. There may be more bond auctions which are likely to be cancelled or devolve on primary dealers," said Abhiroop Mukherjee, associate vice-president and fund manager (fixed income) at Motilal Oswal Mutual Fund.

The total auction size was Rs 15,000 crore and auctions worth Rs 9,000 crore were cancelled. In the recent past, there have been instances where a few auctions have devolved partially on primary dealers. The auction for the 7.88 per cent 2030 paper was worth Rs 6,000 crore.

The yield on the 10-year benchmark bond ended at eight per cent on Friday, compared with its previous close of 8.02 per cent. It is expected that the demand for bonds in auctions would continue to be tepid till international issues, like the Greece bail out, are resolved. The next auction is likely to be announced on Monday.

According to the issuance calendar of government securities, released in March, bond auction of four papers, worth Rs 15,000 crore, is scheduled for next week as well. These will be a five to nine-year bond for Rs 3,000-4,000 crore, a 10-14-year bond for Rs 6,000-7,000 crore, a 15-19-year paper for Rs 3,000-4,000 crore and a 20-year bond worth Rs 3,000-4,000 crore.