11.1% 2003 Gilt Cut-Off Price Set At Rs 104.01

The Reserve bank of India (RBI) has set a cut-off price of Rs 104.01 for the 11.10 per cent paper maturing in 2003, underscoring an implicit yield of 9.47 per cent in the latest government securities auction.

The central bank has set a cut-off price of Rs 107.65 for the 11.68 per cent security maturing in 2006, implying a cut-off yield of 9.93 per cent. Both the auctions went through with no devolvement on the RBI or the primary dealers.

Both the securities were reissued for a notified amount of Rs 2,500 crore each. With the successful completion of the auction, the government has raised 20 per cent of its targeted gross borrowing programme of Rs 116,861 crore.

Following the announcement of the auction results, both the securities in the market were traded at just one paise above their respective cut-off prices. "The cut-off prices were along expected lines and there was little reaction in the market to the news," said a primary dealer.

Both the auctions had been widely expected to go through without devolvement as there is strong appetite right now for the short-term paper.

The last time a paper of comparable maturity was issued was on April 22 when the 9.90 per cent 2005 was auctioned at a cut-off price of Rs 100.07 or an implicit cut-off yield of 9.88 per cent. On that occasion, too, the auction faced no devolvement.

The commission for primary dealers was four paise for the 2003 paper, while it was five paise for the 2006 paper.

The 11.10 per cent 2003 received 183 bids for a total amount of Rs 4,897 crore of which 76 bids were accepted for the notified amount. The partial allotment percentage was 71 per cent (13 bids) with a weighted average price of Rs 104.06 and a weighted average yield of 9.46 per cent.

The 11.68 per cent 2006 received 208 bids for Rs 6,125.7 crore of which 75 bids were accepted for the notified amount.