Gilt auction cancelled once again - Times of India

Gilt auction cancelled once again – Times of India

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MUMBAI: For the second consecutive week, the RBI cancelled the auction of government securities (G-Secs), worth Rs 24,000 crore, since the government had enough cash in its coffers. According to the G-Sec auction calendar that was published on September 27 last year, the government was to borrow Rs 24,000 crore on February 18.
“On a review of the cash balance position of the government, it has been decided…to cancel the auction of all the securities scheduled to be held on February 18, 2022,” the RBI said on Monday.
The decision is expected to further help soften the G-Sec yield, like it did when the previous auction scheduled on February 11 was cancelled, bond dealers said. After the RBI on February 7 had cancelled the G-Sec auction, the benchmark bond yield on 10-year gilts had softened from 6.95% level to its Monday closing level of 6.68%, official data showed.
Data from the central bank showed that as of February 5, the government had nearly Rs 2-lakh-crore cash with it. “The decision is expected to cool market sentiment further and would help the current rally in bond prices to continue,” a bond market participant said on Monday.
Also, the LIC IPO is expected to bring in about Rs 60,000-70,000 crore into the government’s coffers by March end. “Cash balance of the government is expected to remain comfortable for the next few weeks,” the market participant said.



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