1 min read.Updated: 03 Jun 2021, 06:44 PM ISTRonojoy Mazumdar, Bloomberg
Primary dealers bought about ₹12,680 crore, or 40% of the ₹32,000 crore of sovereign bonds on offer, the RBI said. Overall, investors bought ₹21,930 crore of debt. Long-end bonds fell
India’s central bank asked primary dealers to rescue yet another government debt auction in efforts to keep a lid on yields ahead of the monetary policy review on Friday.
Primary dealers bought about ₹12,680 crore ($1.7 billion), or 40% of the ₹32,000 of sovereign bonds on offer, the Reserve Bank of India said in a statement Thursday. Overall, investors bought ₹21,930 crore of debt. Long-end bonds fell.
The central bank has asked underwriters multiple times this year to rescue debt auctions or canceled the sales, indicating dwindling demand for the government bonds. Traders may also be refraining from taking any risk ahead of the monetary policy decision Friday, where it’s likely to outline bond purchases for the July quarter.
The RBI can set the auction prices for “some time, but I’m not sure how long that can last. Clearly, there is a conflict between what RBI wants in terms of price and what the market wants," said Pankaj Pathak, fund manager at Quantum Asset Management. One of the reasons why people are not bidding may also be due to the RBI policy on Friday, said Pathak.
Underwriters bought ₹10,740 crore of 2026 bond, almost all of the ₹11000 crore on offer, and purchased ₹1,940 crore of 2050 bond, compared with the ₹7,000 crore target, according to the central bank.
The yield on the 6.67% 2050 bond rose two basis points to 6.97%, while that on the benchmark 10-year notes were little changed at 6%.