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Mumbai: Indian govt bond market is set to create a new weekly mobilisation record with a second state loan auction of Rs 24,000 crore that was closed on Thursday, taking the week’s total to Rs 74,000 crore, RBI data showed.

Bond market players said never in the history of the Indian bond market has such a large amount of money been raised within a week. Interestingly, on Thursday evening, RBI said it would auction state loans worth another Rs 60,032 crore on Tuesday, March 26.

In this auction, a record 18 state govts are slotted to raise between Rs 100 crore (Puducherry) and Rs 10,500 crore (UP), RBI data showed. The duration of these state bonds also varies between two years (Uttarakhand) and 31 years (Kerala).

In the first auction of the week on Tuesday, cut-off prices had spiked a bit during the auction with the 10-year state papers rising to about 7.47% – a rise of about 6-8 basis points (100 basis points = 1 percentage point), over the previous auction on March 12.

Bond players, however, said that although the amounts are huge, this is unlikely to disrupt the yields in any major way. This is because central govt has not borrowed through gilts since mid-Feb and RBI has also been managing the auctions in a non-disruptive manner.

Also, states have together borrowed lesser than expected at the start of the quarter. Including the next week’s state loan auction, the total borrowing this fiscal would be Rs 10.1 crore, compared to a revised estimate of Rs 10.3 crore, a bond dealer said.

  • Published On Mar 22, 2024 at 08:59 AM IST

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