Largest bond sale of Rs 20,000 cr fully covered

The Reserve Bank today auctioned the highest ever quantum of government bonds worth Rs 20,000 crore which was fully subscribed on increased demand after over Rs 40,000 crore of redemption of a security and on value-buying.
The Reserve Bank offered to sell Rs 5,000 crore of 8.35 per cent (2022) bond, Rs 9,000 crore of 8.24 per cent-(2027) bond and Rs 3,000 crore each of 9.20 per cent (2030) and 9.23 per cent (2043) bonds.
There was redemption of Rs 40,751.20 crore worth of the 7.37 per cent bond maturing in 2014 yesterday.
"There was replacement demand after redemption of a security. The participants were also aggressively buying in the auction as they were getting better yields," said a dealer with a state-owned bank.

According to dealers, LIC bought the majority of long-term offering today -the 9.20 per cent (2030) and 9.23 per cent (2043) bonds.
The central bank set the cut-off price for 2022 offering at Rs 95.45 and yield of 9.1584 per cent. For the 2027 bond, it has fixed the cut-off price at Rs 92.05, yielding 9.3122 per cent.
The cut-off prices for the 2030 (9.20 per cent) and the 2043 (9.23 per cent) bonds were set at Rs 99.50 and Rs 99.27, respectively, while the yields were set at 9.2585 per cent and 9.3004 per cent, respectively.