Mumbai: India’s banking regulator, the Reserve Bank of India rejected all bids at a scheduled auction of Rs12,000 crore of government bonds on Friday, without giving any reasons for the move.
The government will auction Rs10,000 crore of bonds on 20 March, the finance ministry said in a statement later. It will sell Rs4,000 crore of 6.72% 2014 bonds and Rs6,000 crore of 6.05% 2019 bonds.
Bond yields tumbled from four-month highs. The 8.24% bond yield maturing in 2018 closed at 6.80% after rising as high as 7.37%, a level last seen on 20 November. It had ended at 7.17% on Thursday.
“The central bank is probably trying to give some sort of a signal to the market, but they still have to come back to the market for auctions, it’s a temporary rally and I would wait and watch for further announcement,” said Vineet Malik, head of interest rates at HSBC India.
During the day, public sector bank officials met the central bank individually to discuss the sharp surge in bond yields before the end of the fiscal year on 31 March, two industry sources familiar with the matter said on condition of anonymity.