Rbi Slashes Yield On 10-Yr Paper
The Reserve Bank of India (RBI) has slashed the yield on 10-year paper by 10 basis points to 13.65 per cent at the auction of the Rs 1000 crore gilts issue of the centre.
The cut leads to a further flattening of the yield curve.
The RBI has taken advantage of the easy liquidity conditions to bring down the yields.
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The cut-off yield in the earlier auction of 10-year central government paper was actually 13.85 per cent. Later the RBI had reduced the yield on 10-year state government paper to 13.75 per cent.
Yesterdays issue was oversubscribed by nearly 3 times. Against the notified amount of Rs 1000 crore the RBI received 173 bids to the tune of Rs 2914.62 crore.
The RBI accepted 75 bids of which 34 bids got partial allotment.
There was no devolvement on either the RBI or the primary dealers.
It might be recalled that in the previous issue of 10-year paper, the market subscription was only to the extent of 48 per cent.
The decline in the cut-off yield was in tune with market expectations.
The market was expecting the cut-off to be in the region of 13.60 - 13.65 per cent.
The lower cut off in yesterdays auction is significant given that the year end valuation of securities is round the corner.