9.85% Paper Oversubscribed 205%

The 9.85 per cent 2015 Central government paper auctioned today was oversubscribed 204.83 per cent.

The Reserve Bank of India (RBI) received 382 bids of Rs 12,193.35 crore for a notified amount of Rs 4,000 crore. It accepted 113 bids at a cut-off price of Rs 109.83 -- equivalent to an estimated yield of 8.6212 per cent. There was a partial allotment of 84.78 per cent in 11 bids and the weighted average price at the auction was Rs 109.95.

With this auction, the government has completed 86 per cent of its gross borrowing programme of Rs 1,18,852 crore.

Money market dealers said good liquidity conditions helped by the recent redemptions of government security helped the auction to sail through successfully.

 

Said a dealer with a private sector bank: "In the last week there was a Rs 6,000-crore inflow into the system through redemption and coupon payments. This has made space for the Rs 6,000 crore of auction during the week."

The cut-off price in the auction was above market expectations of Rs 109.21-Rs 109.25 (8.67-8.68 per cent) and this led to the paper's overwhelming result. The price of the paper closed at Rs 109.88 (8.68 per cent).

The paper was first issued on October 16 this year where it was oversubscribed more than 200 per cent of its notified amount of Rs 6000 crore. The yield, however, was slightly higher at 9.85 per cent against the secondary market yields of 9.79 per cent. The paper has been amongst the most traded gilts, with trades in this paper in the last one month amounting to Rs 20,976 crore -- 20 per cent of total trades in the same period.