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G-secs worth Rs 11,000 crore remain unsold in first auction of FY22
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G-secs worth Rs 11,000 crore remain unsold in first auction of FY22
TNN / Updated: Apr 10, 2021, 11:43 IST
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MUMBAI: Government securities (G-secs) worth nearly Rs 11,000 crore remained unsold in the first gilt auction of fiscal 2022. This indicates a revival of the tug of war between traders, who want higher yields, and the central bank which wants the opposite. Similar actions were seen during the last four months of the previous financial year.
On the positive side for the government bond market, the benchmark yield on the 10-year gilts closed marginally softer at slightly below the 6.02% level.
Yields on the benchmark 10-year bond on Friday fell below 6 per cent for the first time in two months as expectations swirled around the G-Sec Acquisition Programme (G-SAP 1.0) of the Reserve Bank of India (RBI) which kicks off next Thursday.
The programme is meant to stabilise yields that will enable the government to carry out its gargantuan Rs 12-lakh-crore borrowing programme for the year without disrupting the fund-raising plans of other companies.
In the meantime, the RBI on Friday undertook a variable rate reverse repo (VRRR) auction that was meant to push up short-term yields leading to the flattening of the yield curve over time.
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The 10-year bond yield fell below 6 per cent in intra-day trade on Friday after the Reserve Bank of India (RBI) committed to buying at least Rs 1 trillion of bonds from the secondary market. In the morning trade, the yield dropped to 5.97 per cent, but it climbed up to close at 6.02 per cent once it was found that the central bank had refused to sell a new 5-year benchmark paper at the rate demanded by the market. Instead, the RBI forced the primary dealers, or underwrites of the auction, to buy almost the entire stock of the new 5-year benchmark paper at 5.63 per cent.