G-Sec yields harden as RBI partially devolves auction of a paper – The Hindu BusinessLine

Clipped from: https://www.thehindubusinessline.com/money-and-banking/g-sec-yields-harden-as-rbi-partially-devolves-auction-of-a-paper/article38177784.ece

WIDE

Yield of the 10-year benchmark G-Sec/GS maturing in 2031 rose about 2 basis points to close at 6.5423 per cent

Government securitie (G-Sec) yields hardened on Friday as the Reserve Bank of India partially devolved auction of a G-Sec on primary dealers at the weekly auction.

In the last one week, yield of the benchmark paper surged about 9 basis points and its price declined about 61 paise. Bond yields and price are inversely co-related and move in opposite directions.

Barring the 5.74 per cent GS 2026, the auction of the remaining papers — 4.56 per cent GS 2023 (notified amount: ₹2,000 crore, 6.67 per cent GS 2035 (₹9,000 crore) and 6.99 per cent GS 2051 (₹7,000 crore) — sailed through.

Read more: ReNew raises $400 m by issuing green bonds

Against the notified amount of ₹6,000 crore at the auction of the 5.74 per cent GS 2026, RBI accepted bids amounting to ₹ 1,612 crore and devolved the balance ₹ 4,388 crore on primary dealers. RBI accepted greenshoe amount of ₹ 500 crore at the auction of the GS 2023 paper.

Meanwhile, referring to the CSO’s advance estimate of GDP for FY22 at 9.2 per cent, Madan Sabnavis, Chief Economist, Bank of Baroda, opined that based on this number, the RBI will probably retain its earlier stance and not revise any of the rates.

“In fact the accommodative stance will continue and the hike in reverse repo rate will be put off. The possibility of lockdowns will ensure that an easy liquidity policy is pursued unless the inflation number to be released turns out to be very high, which does not look likely,” he said.

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