Government securities (G-sec) auctioned Rs. 27,000 crore bonds in two tranches on Friday. On May 22, it was fully subscribed, reflecting strong investor demand. The cut off price for both bonds was above par.
The 6.75 per cent G-sec with a notified amount of Rs 15,000 crore, maturing in 2029, was sold at a cut-off price of Rs 103.49, yielding 5.8675 per cent. The 7.09 per cent G-sec with a notified amount of Rs 12,000 crore, maturing in 2054, was sold at a cut off price of Rs 103.39, yielding 6.8197 per cent.
The bond yield is the return an investor expects to receive each year over its term to maturity. As per the auction results, the development of primary dealers was stated as ‘NIL’ for both the bonds, indicating healthy demand for G-sec from the investor community.
Primary Dealers, commonly referred to as PDs, are financial institutions authorised by the RBI to buy and sell government securities. The underwriting auction was conducted through multiple price-based methods on May 23 (Friday) between 09:00 A.M. and 09:30 A.M.
Bids under the Additional Competitive Underwriting (ACU) auction were done electronically through the Core Banking Solution (E-Kuber) System. Earlier this year, on March 27, the government had notified the indicative calendar for the issuance of government-dated securities, including Sovereign Green Bonds (SGrBs), for the first half of the fiscal year 2025-26 (April 1, 2025, to September 30, 2025).
The indicative calendar for such auctions is released beforehand in order to enable institutional and retail investors to plan their investments efficiently and to provide transparency and stability to the Government Securities market.
