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Fears materialize as first auction sees high cutoffs & partial devolvement
• The first trading day of FY13 began on a negative note as yields shot up by more than
10bps at opening, reeling under Friday’s unsatisfactory OMO buyback and ahead of the
sizable INR 180bn auction. Yields traded in a narrow range after opening, awaiting the
results of the bond purchase auction and fearing cutoffs higher than prevalent market
yields. The market fears came true when auction results showed marginal devolvement in
two of the instruments over and above the markedly higher cutoffs.
• The RBI set a cut-off of 8.76% for the 8.19, 2020 bond, 8.84% for the 9.15, 2024 bond,
9.00% for the 8.97, 2030 bond & 9.06% for the 8.83, 2041 bond. The RBI devolved INR
3.19bn of the 8.19, 2020 bond & INR 8.76bn of the 8.97, 2030 bond on primary dealers.
• This poor showing at the first auction in a year which will see sustained weekly paper
supply spooked the markets further and the 10-Y benchmark closed at 8.74%, a
whopping 17 bps higher than the previous close of 8.57%. It had opened at 8.67% and
touched a high of 8.78% when the auction outcome was declared.
Non-SLR Market
L&T Finance and L&T Infra Finance placed April Maturity CPs worth INR 4.35bn and INR
3.25bn @ 10.10%. I-Sec PD placed same tenor @ 9.95% for INR 1bn. SREI Equipment
Finance Pvt Ltd placed June Maturity CP worth INR 1bn @ 10.60%.
Money Market
The liquidity stress eased significantly as the year end pressure was released – the series of
dedicated LAF windows to cater to year-end requirements saw demand of INR 1.99 tn.
Borrowing at today’s LAF window toned down to INR 1.38tn and can be expected to ease
further as government spending and G-sec redemption flows come in. The call market also
softened as overnight WAR came off to 9.35% with relatively higher deal volume.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Fears materialize as first auction sees high cutoffs & partial devolvement
• The first trading day of FY13 began on a negative note as yields shot up by more than
10bps at opening, reeling under Friday’s unsatisfactory OMO buyback and ahead of the
sizable INR 180bn auction. Yields traded in a narrow range after opening, awaiting the
results of the bond purchase auction and fearing cutoffs higher than prevalent market
yields. The market fears came true when auction results showed marginal devolvement in
two of the instruments over and above the markedly higher cutoffs.
• The RBI set a cut-off of 8.76% for the 8.19, 2020 bond, 8.84% for the 9.15, 2024 bond,
9.00% for the 8.97, 2030 bond & 9.06% for the 8.83, 2041 bond. The RBI devolved INR
3.19bn of the 8.19, 2020 bond & INR 8.76bn of the 8.97, 2030 bond on primary dealers.
• This poor showing at the first auction in a year which will see sustained weekly paper
supply spooked the markets further and the 10-Y benchmark closed at 8.74%, a
whopping 17 bps higher than the previous close of 8.57%. It had opened at 8.67% and
touched a high of 8.78% when the auction outcome was declared.
Non-SLR Market
L&T Finance and L&T Infra Finance placed April Maturity CPs worth INR 4.35bn and INR
3.25bn @ 10.10%. I-Sec PD placed same tenor @ 9.95% for INR 1bn. SREI Equipment
Finance Pvt Ltd placed June Maturity CP worth INR 1bn @ 10.60%.
Money Market
The liquidity stress eased significantly as the year end pressure was released – the series of
dedicated LAF windows to cater to year-end requirements saw demand of INR 1.99 tn.
Borrowing at today’s LAF window toned down to INR 1.38tn and can be expected to ease
further as government spending and G-sec redemption flows come in. The call market also
softened as overnight WAR came off to 9.35% with relatively higher deal volume.
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