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RBI Treasury Bill And Bond Auction Update: T-Bill Yield 6.86%; Punjab Offers Highest SDL Rates at 7.41%

The Reserve Bank of India (RBI) has announced the next auction of Treasury bills and state development loans (SDLs) with attractive yields for various maturities. The T-bill yields for three-month, six-month, and 364-day maturities are set at 6.71 per cent, 6.83 per cent, and 6.86 per cent, respectively. The auction will see the participation of 11 states, including Punjab, Rajasthan, West Bengal, and others.

Treasury Bill Maturity Yield (%)
Three-month 6.71%
Six-month 6.83%
364-day 6.86%

Punjab Leads with Highest Interest Rates for SDLs

  • Punjab is offering the highest interest rate of 7.41 per cent for SDLs maturing on July 5, 2034.
  • Following closely are Rajasthan and West Bengal, each offering SDLs at 7.40 per cent.
State SDL Interest Rate (Maturing on July 5, 2034)
Punjab 7.41%
Rajasthan 7.40%
West Bengal 7.40%

Flat Trading in Indian Bond Market amid Mixed Economic Signals

  • The Indian bond market experienced a flat trading week as US Treasury yields rose, and investors reacted to mixed economic signals from the Labor Department’s latest data.
  • The market closely tracked inflation and movements in the US treasury yields, leading investors to adopt a cautious stance.

State Governments’ Planned SDL Auction

  • Eleven states, including Punjab, Rajasthan, Kerala, and West Bengal, plan to auction SDLs worth Rs 19,000 crore next week.
  • This amount falls short of the indicative borrowing calendar amount of Rs 24,250 crore, indicating a conservative borrowing approach by the states.

Corporate Bond Market Activity

  • MTNL (Mahanagar Telephone Nigam Ltd.) has tapped the corporate bond market with a government of India guarantee this week.
  • The total issue size is Rs 2500 crore, including the green shoe option.
  • The issue garnered substantial interest from long-term investors and proprietary traders, with bids worth Rs 9,178 crore, of which the issuer accepted Rs 2,480 crore at 7.59 per cent yield, payable semi-annually.
Corporate Bond Issue Issue Size (in Rs Crore) Accepted Bids (in Rs Crore) Interest Rate (%)
MTNL 2,500 2,480 7.59%
SBI Infra Bonds (Expected) 10,000 Attractive yield

Expectations for Corporate Bond Issuances

  • Experts anticipate a reduction in corporate bond issuances compared to the previous month, with few large issuances above Rs 1,000 crore.
  •  PFC (Power Finance Corporation), SBI (State Bank of India), and MTNL were among the significant issuers in July.
  • SBI also plans to issue infra bonds worth Rs 10,000 crore this month, expected to garner good investor response at an attractive yield.

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