RBI Secures Full Subscription for ₹28,000 Crore Bond Sale

The Reserve Bank of India (RBI) has taken decisive steps to secure full subscription for the government's impending ₹28,000 crore bond sale by successfully conducting an Additional Competitive Underwriting (ACU) auction. This meticulous strategy ensures that the entire notified amount will be absorbed, even if investor demand doesn't meet expectations in the main auction set for Friday.

According to an RBI announcement, the auction involved underwriting two long-term government securities: ₹17,000 crore of the 6.68% Government Security maturing in 2040, and ₹11,000 crore of the 7.43% Government Security maturing in 2076. Primary Dealers were tasked with fulfilling a Minimum Underwriting Commitment (MUC), accounting for about half of each issue, with further competitive bids for additional underwriting invited by the central bank.

The cut-off commission for ACU was fixed at 0.39 paise per ₹100 for the 2040 bond, translating to an underwriting fee of approximately ₹3.3 crore, and 0.68 paise per ₹100 for the 2076 bond, amounting to about ₹3.7 crore. This move by the RBI not only aligns the underwritten and notified amounts but also reflects the central bank's measures to stabilize the government's borrowing program, mitigating risks of low investor demand.

(With inputs from agencies.)