RBI sets underwriting commitments for debt auction

RBI said each primary dealer must underwrite a minimum of Rs 1.67 billion ($41 million) at the July 6 sale of the government security maturing in 2017.

The Reserve Bank of India set Rs 1.12 billion as the minimum underwriting commitment at the sale of the 8.33 per cent note maturing in 2036, it said in a faxed statement in Mumbai.

Bidding by all primary dealers together will be Rs 29.94 billion for the 2017 bonds and Rs 19.84 billion for the 29-year note. The auction to determine the fee for primary dealers to underwrite the bonds will be held tomorrow.

Primary dealers, companies that trade directly with the central bank, underwrite government bond issues and get a commission based on the bids they make.

The government plans to sell Rs60 billion of a new 10- year bond and Rs 40 billion of the 2036 bonds at the auction on July 6.