Gilt worth Rs 962 crore unsold in Friday auction

MUMBAI: The RBI’s unwillingness to not let the rate of interest in the economy rise led to a Rs 962 crore devolvement on primary dealers in Friday’s gilt auction through which the government borrowed Rs 15,000 crore from the market.
This devolvement, which seen another way was absence of enough buyers for gilts worth Rs 962 crore, came nearly three months after the first devolvement this fiscal in early April.Dealers said while the limit for foreign funds to buy government securities (G-sec) in India has almost been exhausted, with RBI not willing to let interest rate rise, there were not enough takers for gilts at lower rates.
In Friday’s auction, the government sold the current benchmark 10-year gilt worth Rs 7,000 crore, 18-year gilts worth Rs 2,000 crore, 28-year gilts worth Rs 3,000 crore and 6-year gilts worth Rs 3,000. Gilts worth Rs 962 crore of the 6-year paper was unsold in the auction, an RBI release showed. The cut off yield for the 10-year paper was 8.73% per annum, while for the 6-year paper it was 8.55%, for the 18-year paper it was 8.75% and for the 28-year paper it was 8.77%, RBI release showed.
Earlier in the fiscal, on April 4, 29-year gilts worth Rs 864 crore had devolved and since then till Friday there was no other devolvement of gilts in auctions.