India’s weekly dated securities sale cleared without strain. The Reserve Bank of India reported that the October 30 auction accepted the full notified amount on all four lines, 33,000 crore rupees in total, with devolvement on primary dealers of nil on every security. Settlement follows on the standard schedule, and the sale sits on top of the four day repo operation that reversed the same day.
The cut-offs map the curve investors are being paid to hold. The 6.20% GS 2029, 9,000 crore, cut off at a price of 97.69 for an implicit yield of 7.1218 percent. The 6.57% GS 2033, 12,000 crore, cut off at 95.71 for 7.3818 percent. The long bond, the 7.63% GS 2056, 9,000 crore, cut off at 97.51 for 7.8459 percent. The green line, the 7.50% GOI Sovereign Green Bond 2056, 3,000 crore, cut off at 96.23 for 7.8292 percent, marginally through the conventional long bond’s yield.
Two features stand out. First, the absence of devolvement means primary dealers were not left holding unsold stock, a cleaner result than the episodes earlier this year in which states and the centre saw yields rejected or auctions devolve. Second, the green bond pricing at a small premium to the conventional 2056 line suggests the dedicated buyer base for the sovereign green programme is still there at size, even with the system’s liquidity in deficit and the call money rate trading in the upper half of the RBI’s corridor this week.
The funding context remains tight but improving. This site’s running RBI liquidity story recorded net liquidity at minus 13,453 crore on Wednesday, a much smaller deficit than earlier in the week, with the marginal standing facility draw down to 495 crore. A full take at these cut-offs, in that liquidity setting, says the market will fund the borrowing programme at a price, and the price at the long end is a yield close to 7.85 percent.