Government Bonds Buyback fail again for Third time
The government is now the third time in this month witnessing failure in an attempt to introduce a buyback program. This can be explained by the fact that most of the bids have been turned down by the RBI (Reserve Bank of India).
The government has accepted bids that stood at Rs.5226 crore at the auction, which is only 8.7% of the total notified amount of Rs.60000 crore through the RBI. Whereas in the buyback on May 9, the RBI repurchased bonds worth Rs.10513 crore, which was notified against the Rs.40000 crore amount, and in the second buyback bids, they were accepted worth Rs.2069.99 crore against the notified Rs.60000 amount.
During this month, the RBI managed to repurchase only Rs.17849 crore of bonds with its three buybacks this month, failing to meet its target of Rs.1.6 trillion.
Vikas Goel, managing director and CEO at PNB Gilts, said “The market participants offered Rs.19,279 crore at the auction, which is less than a third of the notified amount, because they knew from the previous two auctions that the government was reluctant to accept bids above prevailing levels,”
