State governments plan to auction Rs 19,200 Cr worth of diverse securities whose actual yields are to be decided upon by the Reserve Bank of India conducting the auction on January 16, 2024. From T-Bills to long-term bonds, securities with varied timeframes are scheduled to be auctioned that provide investors with choices based on investment goals. Nine states including Andhra Pradesh, Assam, Bihar, and others will auction stocks for tenures ranging from 7 to 30 years. The auction is scheduled for January 16, 2024, and payments are to be made the next day, through the RBI's E-Kuber system and regional offices of RBI respectively.
Indicative yields on Treasury Bills (T Bills) range from 6.94 per cent for 91 day-tenure bills to 7.13 per cent for longer-tenured instruments. T-bills do not carry an interest component but are issued at a discount and redeemed at true value. Among the state government securities up for auction, Tamil Nadu's SGS 2054 offers the highest yield at 7.73 per cent. Overall, the yields range from 7.62 per cent to 7.73 per cent across the whole spectrum.
Investors can submit electronic bids between 10:30 am and 11:30 am on January 16, 2024, with the RBI determining the accepted yield and price at the auction. Individual investors can also place bids as per the non-competitive scheme through the Retail Direct portal - rbiretaildirect.org.in. Successful bidders will be announced on the same day, and payments are to be made on January 17, 2024.
"The yield per cent per annum or the price as the case may be, expected by the bidder should be expressed up to two decimal points. An investor can submit more than one competitive bid at the same/different rates of yield or prices in electronic format on the Reserve Bank of India Core Banking Solution (E-Kuber) system. However, the aggregate amount of bids submitted by a bidder should not exceed the notified amount for each State," the RBI release said.
For the new stock, interest will be paid half yearly on July 17 and January 17 of each year till maturity, the release said.
Bond Market Updates
Centre raised Rs 33,000 crore through the sale of bonds, which includes Rs 16,000 crore from 10-year bonds.
The week ended with a 10-year benchmark bond yield at 7.17 per cent down from its previous close at 7.16 per cent. Indian government bond yields started with a strong start after the New Year but in the second week of the New Year, it showed marginal dip and the weekly bond auction lacked investors' interest. Many private issuers including Bajaj Finance, Muthoot Fincorp and REC are tapping the bond market with instruments of varied tenures.