What changed
RBI conducted auction for two government securities: 6.68% GS 2040 (notified ₹17,000 crore) and 7.43% GS 2076 (notified ₹11,000 crore). Both were fully subscribed at cut-off prices of ₹96.71 and ₹98.64 respectively, with no devolvement on primary dealers.
What it means for you
Full subscription without devolvement signals strong demand for long-tenor government paper. The yields (7.05% for 14-year and 7.53% for 50-year) set benchmarks for bank HTM portfolios and corporate bond pricing. Banks can use these cut-off yields for marking-to-market and ALM decisions.
What you must do
- Update HTM portfolio valuation using these cut-off yields for similar tenor G-Secs.
- Align corporate bond pricing spreads with the new benchmark yields.
- Monitor primary dealer appetite for future auctions to gauge liquidity conditions.
Who it affects
Treasury desks at all banks, Primary dealers, Asset-liability management teams, Corporate bond issuers and investors
What were the cut-off yields for these securities?
6.68% GS 2040 cut-off yield was 7.0530%; 7.43% GS 2076 cut-off yield was 7.5346%.
Was there any devolvement on primary dealers?
No, devolvement was nil for both securities, indicating full market absorption.