Why did RBI accept 79% of buyback bids despite high demand?
The Reserve Bank of India accepted ₹19,925 crore in its third buyback, falling short of the ₹25,000 crore notified amount, as bids likely exceeded the RBI's yield expectations. Market participants offered ₹40,339 crore, with the 5.63% GS 2026 bond...
By ET Bureau |
ANI
Of the three securities, the RBI accepted ₹10,221 crore in the 5.63% GS 2026 bond, ₹5,441 crore in the 7.27% GS 2026 bond and ₹4,261 crore in the 6.99% GS 2026.
Mumbai: The Reserve Bank of India (RBI) on Thursday accepted 79% of the total notified amount in its third buyback of this fiscal year, as market participants likely bid at higher yields than the central bank's comfort level, experts said. The RBI accepted bids worth ₹19,925 crore, while the notified amount was ₹25,000 crore. Market participants bid a total of ₹40,339 crore for the buyback, RBI data showed.
The RBI, which is the Centre's debt manager, bought back three securities maturing in the next financial year, with the 5.63% GS 2026 bond seeing the most demand. "Market participants may have bid aggressively, and likely beyond the RBIs comfort levels. This could be why the entire amount wasn't taken even as the amount offered was larger," said Gopal Tripathi, head of treasury at Jana Small Finance Bank. Buybacks are used as a tool to smoothen out the government's future debt repayment obligations and bring down the repayment pressure for that year. Of the three securities, the RBI accepted ₹10,221 crore in the 5.63% GS 2026 bond, ₹5,441 crore in the 7.27% GS 2026 bond and ₹4,261 crore in the 6.99% GS 2026.
