India’s Friday government bond sale cleared cleanly. The Reserve Bank of India sold the full 34,000 crore rupees notified of the 6.94 percent government stock maturing in 2036 at a cutoff price of 96.91 rupees, a yield to maturity of 7.3955 percent, with a weighted average yield of 7.3925 percent.
Demand was comfortable rather than frantic. The auction drew 400 competitive bids totalling 94,072 crore rupees, about 2.8 times the notified amount, and 113 bids were accepted for 33,961 crore rupees, with a partial allotment of about 20.7 percent at the cutoff. Non-competitive bids added a further 39 crore rupees, all accepted. The full 34,000 crore rupees of underwriting was accepted from primary dealers and devolvement, the amount underwriters are forced to take onto their own books, was nil.
The result sits inside a heavy Indian supply calendar that this beat has tracked all month, including treasury bill and state government security auctions and the Reserve Bank’s overnight liquidity operations. A 10 year clearing at 7.40 percent with no devolvement, in the same week that global long yields are rallying on safe haven demand, keeps the Indian curve’s story domestic: supply is being absorbed at a price, and the price is a yield high enough to clear without official support.