Auction of three G-Secs aggregating ₹24,000 crore sails through

The auction of three Government Securities (G-Secs) aggregating ₹ 24,000 crore sailed through on Thursday, with the cut-off on the widely-traded benchmark 10-year G-Sec coming in about 2 basis points lower vis-a-vis the previous close.

The cut-off yield on the benchmark 10-year G-Sec (maturing in 2031 and carrying coupon rate of 6.10 per cent) came in at 6.3441 percent against the previous closing yield of 6.3612 per cent.

The cut-off price on the aforementioned G-Sec was about 12 paise higher at ₹ 98.25 against the previous close of ₹ 98.1275. Bond yields and prices are inversely correlated and move in opposite directions.

The Government mopped up ₹13,000 crore through auction of this paper.

A dealer with a public sector bank said G-Sec yields trended lower on the back of thaw in the US treasury yields. Further, buoyant tax collections and expected pick up in public sector disinvestment are likely to ensure that the government may not go in for additional borrowing.

In the secondary market, yield on the 10-year benchmark G-Sec closed lower at 6.3455 per cent against the previous close of 6.3612 per cent. Price of this security ended up about 11 paise at ₹98.24 against the previous close of ₹98.1275.

Brickwork Ratings, in a recent, report opined that yields are expected to maintain a hardening trend in the short and medium term, and the 10-year gilt yield is expected to remain at around 6.25 per cent in the short run and rise to 6.5 per cent in the later part of the second half (H2) 2022 owing to the augmented government borrowings and the inflationary trend.

The Government raised ₹4,000 crore via auction of the Floating Rate Bond maturing in 2034 at a cut-off yield of 4.8827 per cent and cut-off price of ₹99.25.

Further, the Centre mopped up ₹7,000 crore via auction of a new G-Sec maturing in 2061 at a cut-off yield of 6.9500.