Robust Demand Evident as G-Sec Auction Fully Subscribed

The recent auction of Rs. 27,000 crore government securities across two tranches was entirely subscribed, showcasing significant investor interest. The 2029 bond yielded 5.8675%, while the 2054 bond yielded 6.8197%. No primary dealers developed these bonds, highlighting healthy market demand.

The government's auction of Rs. 27,000 crore in government securities, divided into two tranches on Friday, was entirely subscribed, signifying robust appetite from investors. Cut-off prices for both bonds exceeded par values. The first bond, yielding 5.8675%, involves Rs. 15,000 crore maturing in 2029, and was sold at Rs 103.49. Similarly, the second bond, valued at Rs 12,000 crore and maturing in 2054, was sold at Rs 103.39, yielding 6.8197%.

This enthusiastic response from investors indicates confidence in government securities, with no primary dealers opting to develop these bonds, a sign of strong market interest. Primary Dealers (PDs), financial entities authorized by the RBI, are vital players in buying and selling government securities. The underwriting process occurred through price-based methods on May 23, conducted electronically via the E-Kuber system.

Furthermore, the government had earlier announced the issuance calendar for government-dated securities, including Sovereign Green Bonds, for the first half of fiscal 2025-26. This pre-announcement aids investors in planning and stabilizes the government securities market.

(With inputs from agencies.)