MUMBAI, JUNE 26: The government of India on Friday announced auction of three securities in a bid to garner Rs 5,500 crore from the market. It plans to raise the money through a three year, five year and twelve year papers. The auction will be conducted by the Reserve Bank of India on July 1.The three year security is expected to mop Rs 2,500 crore, the five year Rs 2,000 crore and the 12 year another Rs 1,000 crore, a finance ministry release said in New Delhi. The 12-year bond is making an appearance after a a gap of few years.
Dealers said that the government is likely to mop up the entire amount. "There is unlikely to be any devolvement on the Reserve bank as there is ample liquidity in the system," a debt analyst in a leading brokerage house said.
The government seems to have factored the response to the fixed rate repo while announcing the auction of three new stocks. The RBI mopped up Rs 5567 crore in the past two days through the repo window. The amount will come back to the system just beforeJuly 1, the day of the auction.
The market expects the RBI to fix the coupon of the three year paper in the range of 11.42-11.45 per cent, five year at around 11.60-11.65 per cent and the 12 year at 12.2 per cent. Last week, the Reserve Bank of India mopped up Rs 5031 crore through the sale of two `tap' stocks of ten and six years maturity at a coupon of 12.10 per cent and 11.75 per cent, respectively.
The July 1 auction will complete Rs 40,531 crore worth of the centre's borrowing in the current fiscal out of a net borrowing programme of Rs 48,000 crore. The gross borrowing programme is pegged at Rs 79,000 crore. The RBI has taken Rs 14,000 crore in its books on account of devolvement.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
