Comments
Government security (G-Sec) prices rose by up to 35 paise on Thursday, with their yields softening by up to 7 basis points, as the Reserve Bank of India set higher cut-off price at the special auction of two G-Secs.
Price of the highly-traded 10-year G-Sec, carrying a coupon rate of 5.77 per cent, closed at ₹98.2450, up about 16 paise over the previous close, with its yield thawing about 2 basis points to 6.1054 per cent.
G-Sec prices and yields are inversely related, moving in opposite directions.
Price of the new 10-year G-Sec, carrying a coupon rate of 5.85 per cent, closed at ₹99.17, rising about 35 paise over the previous close, with its yield softening about 5 basis points to 5.9616 per cent.
The cut-off price at the special auction of two G-Secs (5.15 per cent G-Sec 2025 and 5.85 per cent G-Sec 2030) was higher than their prevailing secondary market price, triggering a rally in the secondary G-Sec market ahead of the scheduled auction of G-Secs on Friday.
The G-Sec market has been on tenterhooks about the increased government borrowing programme despite RBI continuing with certain relaxations relating to the quantum of securities banks can hold in the so-called ‘held to maturity’ investment bucket. The higher cut-off will ensure that Friday’s auction sails through without a hitch.
At the auction of the 5.15 per cent G-Sec 2025, the cut-off price at ₹98.38 (yield: 5.541 per cent) was 24 paise higher than the previous close of ₹98.14 (5.5997 per cent).
At the auction of the 5.85 per cent G-Sec 2030, the cut-off price at ₹99.09 (yield: 5.9726 per cent) was about 27 paise higher than the previous close of ₹98.8175 (6.0099 per cent).
Special auction
The government raised ₹26,000 crore via the special auction (₹13,000 crore via each G-Sec against the notified amount of ₹11,000 crore).
On Friday, the government will be raising ₹26,000 crore through sale of four dated securities. The government will have the option to retain additional subscription up to ₹2,000 crore against each security.
Comments
COMMENT NOW
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.