Cut-off yields for state loan sale of Rs 85.30 billion ($1.37 billion) later in the day are expected to fall within a 9.70-9.80 per cent band, according to a Reuters poll of 10 market participants.
The lowest cutoff was 9.60 per cent, while the highest was 9.85 per cent, as per the poll.
A proposed rule change by RBI has raised concerns on how state loans will be valued, which seeks to change pricing from a fixed 25 bps spread over government securities to one based on the spread from the previous two state loan auctions.
"These bonds also provide comfort against depreciation in government bonds. So no one is interested in buying if the new valuation rule becomes effective," said a senior bond dealer with a state-run bank.
State-run banks are the main buyers of these bonds. The last state loan auction saw cutoffs in the 9.48-9.72 band with Andhra Pradesh state seeing less than full acceptance.
Yields on government bonds up 16 bps since Feb. 11, the last state loan sale.
No comments:
Post a Comment