India’s central bank sold a draft 320 billion rupees ($ 4.4 billion) of bonds in its weekly sale on Friday, with many traders expecting the monetary authority to buy back the shares later.
The Reserve Bank of India bought 100 billion rupees of the 6.64% 2035 to 6.5881% bond against 6.58% estimated in a Bloomberg poll and bought an additional 110 billion rupees of the 2026 bond at a yield 5.5442%. Previously, the low subscription fees had indicated that the auction would be up for grabs.
Traders said auction demand for the longer papers, including the 2035 bond, suggests that investors are hoping the RBI will offer to buy the longer papers during its planned 350 billion rupee debt purchase. May 20. to be purchased are not yet announced.
“The demand is increasing just because RBI has absorbed much of the extra supply,†said Badrish Kulhalli, head of fixed income at HDFC Life Insurance Co.
The 10-year bond yield rose two basis points to 5.99%, little changed after the auction results. Last week’s auction also saw strong demand for 10-year benchmark bonds and the RBI subsequently bought Rs100 billion of the paper during its Twist operation on Thursday.
RBI Governor Shaktikanta Das previously offered insurance to bond investors by announcing Rs 1 trillion in bond purchases this quarter and pledging to keep rates low for as long as needed to restore the country’s economic growth. on rails. Still, they fear the government will need to borrow more if it faces a loss of income amid calls for a nationwide lockdown to tackle the world’s worst viral crisis.
– With the help of Ronojoy Mazumdar
