Rs 8000 Crore Twin-Auction Scheduled On Monday

The Reserve Bank of India (RBI) has announced that it will hold a twin-auction of Rs 8,000 crore on October 15.

While it is targeting to raise Rs 2,000 crore through reissue of 10.18 per cent 2026 paper, another Rs 6,000 crore is aimed through a price-based auction of a 14-year paper.

With these auctions, the central bank will be completing Rs 95,500 crore (79.74 per cent) of the gross government borrowing programme of Rs 1,19,770 crore.

Dealers are expecting that both the auctions will sail through as there is enough liquidity in the market.

A dealer with a private sector bank, "The liquidity condition has been good throughout the current fiscal. Moreover, the government securities market, after remaining volatile after the September 11 attacks, has turned stable off-late. In a situation like this, both the papers are likely to receive good subscription."

Dealers said though banks and financial institutions may not be interested in the 10.18 per cent 2026 paper, it would receive adequate subscription from the insurance companies.

However, players said there were no takers for the 25-year paper in the secondary market. While the yield-to-maturity of the 25-year paper closed at 10.10 per cent, the secondary market yield-to-maturity of the 14-year paper was at 9.72 per cent.

The government borrowing in the first-half of the current fiscal has been higher at Rs 87,500 crore compared with 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.