BackIndia treasury bill auction fails first time since February
RBI accepted Rs6096 crore of offers for the 91-day notes, less than the Rs8,000 crore goal
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Mumbai: India missed its target to sell treasury bills at Wednesday’s weekly auction for the first time since February on speculation the central bank rejected bids after local yields surged amid a global selloff in bonds.
The Reserve Bank of India, which manages the government’s borrowing programme, accepted no bids at an auction for Rs6,000 crore ($938 million) of 364-day bills, according to a statement. It accepted Rs6096 crore of offers for the 91-day notes, less than the Rs8,000 crore goal. This is the fourth failed auction this year after the government missed its target at two sales in February and one in January.
“The rejection of bids for one-year treasury bills sends a strong signal that the RBI may not be comfortable with higher rates," Gopikrishnan MS, head of foreign exchange, rates and credit for South Asia at Standard Chartered Plc in Mumbai, said in an e-mail interview. “A higher treasury-bill yield could hinder transmission of rates" to borrowers, he said.
India’s benchmark 10-year yields climbed 19 basis points in the last two weeks as a global rout wiped more than $400 billion off the value of fixed-income securities around the world in about a month. Twelve-month commercial paper rates in India have rallied to 9.03%t from this year’s low of 8.71% on 13 April, data compiled by Bloomberg show.
The central bank didn’t accept any of the 73 bids worth Rs15,117 crore that it received at the 364-day auction. The cut-off yield for the 91-day sale was 7.9770%, with bids received for Rs22,103 crore. That compares with 7.8519% at 15 April sale.
Wednesday’s auction failure comes after cut-off rates at 8 May offering of sovereign notes exceeded estimates in a Bloomberg survey. India’s central bank has cut the benchmark repurchase rate twice this year to 7.50%. Bloomberg
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