Govt to sell Rs 12000 Cr bonds on 8th May

The government has announced it plans to raise Rs 12k crores through the sale of three securities - 6.05% paper expiring in 2019, 8.24% paper maturing in 2027 and 6.83% paper expiring in 2039 - on Friday. While it will raise Rs 6k crores through the first bond, Rs 3k will be raised through each of the other two.

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The auction comes amidst market concern about the government struggling to meet its liquidity needs, since it has been borrowing extra funds from the central bank for it.

The Union government’s outstanding loans from RBI under the ways and means advances, or WMA, facility stood Rs 40,000 crore as on April 24, more than double the Rs 20,000-crore limit set for the first-half of this fiscal for the second consecutive week.

Though borrowing within the stipulated limit is considered normal by the market, regular breaching of the limit tends to send wrong signals to the market. The WMA is a withdrawal facility provided by RBI to the government to meet temporary mismatches in its cash flows.

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Meanwhile 10 year bechmark is rallying strongly to trade at 6.21% at 3 15pm, yield down from 6.30% on Tuesday. The rupee weakened on Wednesday, dropping from two and half month highs touched in the previous session to trade at 49.60 against the dollar at 3 15 pm, hurt by the dollar strentgh overseas.