Zero-Coupon Bond Sees 25% Devolvement

Out of a notified amount of Rs 2,000 crore, the central bank received 45 applications for an aggregate amount of Rs 1,493.01 crore.

The RBI picked up Rs 454.26 crore and the primary dealers picked up Rs 52.73 crore of the devolved amount.

The devolvement did not come as a surprise to the market as the paper was being offered at a high price as compared with the already available stock in the secondary market.

Dealers said that if the central bank had not resorted to moral suasion, there would have been a 50 per cent devolvement.

Despite the easy money conditions in the inter-bank money markets, the banks did not pick up the paper as it was being made available at Rs 60.66.

 

An earlier issue of the same paper was available at Rs 60.20 in the secondary market on Saturday.

Some primary dealers also refrained from accepting bids on behalf of banks at the sale due to the unresolved issue of how much commission should be paid.

Banks, on the other hand, were reluctant to participate in the sale directly, exacerbating the market's disinterest in the four-year paper.