The central bank has been bidding for the government in 11.30%, 2010 paper at Rs 110.53 or at a yield of 5.24%.
The Reserve Bank of India, on the government’s behalf, has started to offer screen-based bids on two securities—the 11.30% 2010 and 6.57% 2011—since Tuesday, market sources said on Thursday.
“There are two securities with a buyback amount of Rs 250 crore each,” a market source said. “Once that amount has been exhausted, they (government) could buy back more,” the source said. He said the RBI is buying back securities anonymously. “Who else will offer to buy such a quantum in these illiquid securities?”
The central bank has been bidding for the government in 11.30%, 2010 paper at Rs 110.53 or at a yield of 5.24%.
Similarly, the RBI has been bidding in the 6.57% 2011 paper at Rs 100.78 or 5.45% yield. The government had offered to buy back gilts last week up to an amount of Rs 20,000 crore in a bid to infuse liquidity in the cash-strapped banking system. While the government bought back gilts worth Rs 8,307 crore in the first tranche on June 18 against the offer of Rs 10,000 crore, it accepted bids for a mere
Rs 806 crore on Monday against an offer of another Rs 10,000 crore. Thus, the government is still left with repurchase worth Rs 10,887 crore, and it may spend the entire amount on the gilt buyback if it gets a good response to the screen-based offer.
Two gilts—12.25%, 2010 and 11.30%, 2010—are due to mature next month, while the 6.57%, 2011 sovereign bond comes up for redemption in February.
Liquidity has been tight in the banking system after an estimated Rs 67,700 crore flowed out from the banking system as payment for 3G spectrum on May 31 and another Rs 38,600 crore went towards payments for broadband spectrum.
Another Rs 25,000 crore went out on June 15, as companies paid their first installment of advance tax.
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