The Reserve Bank of India (RBI) on February 17 partially devolved 7.26 percent 2033 government bonds on primary dealers (PD) at weekly bond auction due to lower demand from investors.
The central bank devolved Rs 8,254.377 crore of the 7.26 percent 2033 bonds on PDs, out of total Rs 12,000 crore that was planned to be raised.
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The RBI set cut-off price of Rs 99.42 or 7.3424 percent on the 7.26 percent 2033 bonds.
Devolvement refers to a situation when a security or debt issue is undersubscribed, in that case underwriters of bonds, mostly primary dealers, are forced to buy the unsold bonds.
The other two bonds, maturing in 2027 and 2052, were fully subscribed at the auction.
It set Rs 100.15 cut-off price or 7.3349 percent cut-off yield on 7.38 percent 2027, through which it raised Rs 7,000 crore, and Rs 99.71 or 7.3837 percent on 7.36 percent 2052 bonds and raised Rs 9,000 crore.
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Reacting to the devolvement, the yield on the new benchmark bond 7.26 percent 2033 rose marginally, and now trading at 7.3698 percent. Whereas, the old benchmark, 7.26 percent 2032 bond yield was trading at 7.3870 percent.
In the last few days, the yield on the government securities was easing and trading firm due to no major triggers in the market.
Now, after the devolvement and uptick in US treasury yields, dealers said that yield may harden a bit going ahead.
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