Five states have announced SDL auctions—Assam, Andhra Pradesh, Tamil Nadu, Gujarat, and Telangana.
The Reserve Bank of India (RBI) has announced the latest auction of its treasury bills (T-bills) and state government bonds or state development loans (SDLs) from May 12 to 17. The indicative yields on T-bills maturing in three months, six months, and 364 days are 6.91, 6.99, and 6.99 per cent, respectively.
Bidding started at 6:30 pm on May 12 and will close at 8:00 am on May 17. T-bill yields have been reducing lately from their considerable increase early this year. For UPI (unified payments interface) and net banking customers, the payment deadlines are 8:00 am May 17 and 11:30 pm May 15.
This time, five states have announced SDL auctions—Assam, Andhra Pradesh, Tamil Nadu, Gujarat, and Telangana. Andhra Pradesh offers the highest interest rate among SDLs at 7.43 per cent, maturing on May 17, 2039, followed by Tamil Nadu at 7.35 per cent, maturing on May 17, 2033.
Likewise, Gujarat is offering 7.33 per cent for its SDL maturing on May 17, 2031. Telangana is offering 7.34 per cent for SDL maturing on May 17, 2048, the longest duration among the SDLs. In addition, Andhra Pradesh is offering another SDL that matures on May 17, 2043, at 7.38 per cent.
CPI Inching Towards RBI Comfort Zone
Venkatakrishnan Srinivasan, founder and managing partner of Rockfort Fincap LLP, a fixed income advisory firm, says: “Treasury bills market has been consistently range bound and slowly yields are showing declining trend with the expectations of one more rate pause from MPC.
“Further, with CPI inflation marching towards RBI comfort zone, traders expect the market to open positively on Monday with the bond yields to go down by few basis points.
“However, RBI may be cautious about subsequent inflationary figures. The government bond yield movements may tend to change quickly subject to Fed rate actions, government bond demand-supply scenario, system liquidity, monsoon expectations, etc.”
In its last monetary policy committee (MPC) meeting in April, RBI temporarily halted the repo rate hikes, stressing that it will closely watch the inflation situation and, if needed, could further hike the rates based on the country’s evolving economic situation.