RBI buys only Rs 6,232 cr bonds against Rs 8,000 cr target
Mumbai: The Reserve Bank on Friday bought 78 percent of its planned Rs 8,000-crore government securities buyback from the market as some dealers offered to sell below the prevailing market rate.
The benchmark 10-year bonds were traded in the range of 8.21 to 8.34 percent.
Earlier this week, the RBI had announced to buy Rs 8,000 crore worth of four securities through the OMO (open market operation). However, it purchased only G-secs worth Rs 6,231.85 crore in today's auction as against Rs 27,965.46 crore of bids it received from the market participants.
"Market particpants offered to sell bonds at lower yields. The RBI might not have been comfortable at those levels," Srinivasa Raghavan, Executive Vice-President for Treasury at Dhanlaxmi Bank said.
"All bids offered below 8.26 percent for the 10-year government bonds might have been rejected by the RBI," said a senior dealer with a state-owned bank.
Dealers expect lower acceptance of Government bonds at the auction is likely to have some impact on G-sec market next week.
Early this week, the RBI annouced to undertake OMO after the 10-year Government bond rose to five-year high at 9.47 percent as rupee breached the 64 mark against dollar.
The step was aimed at managing liquidity conditions to ensure adequate credit flow to the productive sectors of the economy.
The RBI announced to buy four long dated securities: 8.15 percent - 2022, 7.16 percent - 2023, 8.33 percent - 2026 and 8.97 percent - 2030 in the auction.
The central bank received maximum number of bids for 8.33percent - 2026 paper, but accepted only 28 bids.
For the 10-year paper, the RBI got 71 bids worth Rs 6,145.77 crore, but it accepted only 27 bids worht Rs 742.77 crore.