Twin Auction Cut-Offs Live Up To Hopes

The Reserve Bank of India (RBI) set a market related cut-off price of Rs 100.15 at the auction of the 7.46 percent 2017 government stock held today.

However, the cut-off price at the auction of the 8.35 per cent 2022 government stock was set slightly lower than the market expectation at Rs 106.50.

Both the papers, which were re-issues, sailed through without any devolvement. The auction of the 15-year paper was for Rs 4,000 crore and that of the 20 year paper was for Rs 3,000 crore. The RBI held both the auctions using multiple price auction method.

The yield on the 15-year paper works out to 7.44 per cent as against the secondary market yield of 7.43 per cent and that on the 20-year paper works out to 7.70 per cent as against the secondary market yield of 7.67 per cent.

For the 15-year paper, the central bank received 261 bids aggregating Rs 6,546.93 crore under the competitive category and 22 bids aggregating Rs 106.76 crore under the non-competitive category.

It accepted 152 bids for Rs 3,893.23 crore under the competitive category and all the bids under the non-competitive category.

At the auction of the 20-year paper, the central bank received 131 bids aggregating Rs 4,288.50 crore under the competitive category and 20 bids aggregating Rs 55.63 crore under the non-competitive category.

It accepted 98 bids for Rs 2,944.36 crore under the competitive category and all the bids under the non-competitive category.

With the twin auction, the central government has raised Rs 96,032 crore through market borrowings and private placements with the RBI in this fiscal so far.

This amount raised accounts for 67.21 per cent of the Centre's budgeted gross market borrowing programme of Rs 1,42,867 crore for 2002-03.

It may be recalled that the RBI had pared the auction size of the 20 year paper by Rs 1,000 crore to Rs 3,000 crore after "taking into account all relevant factors".

As per the indicative calendar for issuance of government securities, the notified amounts and the tenure of the securities for the auction were Rs. 4,000 crore for a security with tenure of 15 years and Rs. 4,000 crore for a security with tenure of 20 years.