Rs 8000 Crore Twin Auction Sails Through

The twin auction of Rs 8,000 crore was oversubscribed today. The reissue of 10.18 per cent 2026 paper was oversubscribed by 56.78 per cent, while the 14-year paper was oversubscribed by 102.95 per cent. With today's auction 79.74 per cent of gross government borrowing programme of Rs 1,19,770 crore is completed.

The Reserve Bank of India (RBI) received bids of Rs 3135.747 crore for the Rs 2,000 crore of 10.18 per cent and Rs 12176.89 crore for the Rs 6,000 crore of 14-year paper.

The cut-off yield of the 14-year paper was set at 9.85 per cent. According to the dealers the cut-off was in line with their expectation. Said a dealer with a private sector bank, "We expect the yield in a range of 9.78 per cent to 9.85 per cent. The yield, though is on a bit higher side, it was not beyond expectation."

The cut-off price for the 10.18 per cent 2026 paper was Rs 101.10 (equivalent to an estimated yield of 10.0567 per cent). Dealers said that they had earlier expected the yield to be in a range of 101 to 101.50. The paper was initially issued on September 10 when it received 92 per cent oversubscription. Dealers said that on both the occasions the main subscribers were the insurance companies and nationalised banks.

The government security market, however, was volatile today because of the auctions. Prices fell by 25-30 paise across maturities and the call rates also remained high in a range of 9.50 per cent to 9.80 per cent.

The government borrowing in the first half of the current fiscal has been higher at Rs 87,500 crore as compared to Rs 77,183 crore during the corresponding period of the last financial year.

Analysts feel that given the lower tax collection and the pump-priming policy of the central government the borrowing programme is likely to exceed the budgeted programme.