The central bank on Friday devolved nearly the entire bond auction on primary dealers, as the markets were demanding higher yields for five-year and 10-year bonds being sold
Holding instrument till maturity could help in tackling volatility
Normally, the market eats out of the RBI Governor's hands but the size of the govt borrowing is killing its risk appetite
The S&P BSE Sensex advanced 1.9% since Monday, completing a 10th consecutive week of gains
The three-part deal also consisted of a 2 billion euro 10-year bond priced at 55 bps over the mid-swap rate
Lowest cut-off yield offered for Karnataka's 9-year bond at 6.4746%, highest for Jammu & Kashmir's 10-year SDL at 6.6813%
The weighted average cut-off for the 10-year SDLs eased by a sharper 26 bps to 6.63 per cent on October 13, 2020 over the previous weekly auction
Says it is comfortable with a rising rupee, which helps bring down import-led inflation, adds that it remains "committed to ensuring comfortable liquidity and financing conditions in the economy"
The bond will be available at State Bank of India and other nationalised banks, as well as four private sector banks, the RBI said in a statement
A steep yield curve has been followed by a bull run in equities on a couple of occasions in the past
The yield on the most-traded 6.45 per cent 2029 note dropped 10 basis points to 6 per cent, extending Wednesday's 7-basis point fall.
The excess borrowing will, however, ease the pressure on the RBI's liquidity operation as banks will absorb the excess G-Secs
One-year return for fund category is 17 per cent
The spread between the 10-year AAA-rated corporate and equivalent maturity government bonds have fallen to 108 bps
The development would attract higher foreign flows as many overseas funds are mandated to track global indices
The cut-off yield for 7.32 per cent-2024 was 6.408 per cent, while for 6.45 per cent-2029, it was 6.5780 per cent
The last such liquidity scene was witnessed just after demonetisation in end of 2016 and early 2017 when banks were parking their deposit-linked money with the central bank
Double-digit returns from these instruments boost tier-1 plans
The rupee started at 69.44 a dollar, and on December 27, closed at 71.32 a dollar.
Move signals lower bond yield at the long end