Demand for India’s Next Repo Issue May Be Less Than Blockbuster
The RBI got bids worth Rs 1.9 lakh crore, eight times more than the Rs 25,000 crore it offered banks in three-year money.
(Bloomberg) -- India’s first long-term repo operation was a blowout. Investor’s interest in the second round may be relatively tame as they shy away from locking rates for a shorter tenor as borrowing rates are expected to fall further.
The Reserve Bank of India on Monday got bids worth 1.9 trillion rupees ($27 billion), eight times more than the 250 billion rupees it offered banks in three-year money. The second issuance on offer for a similar amount on Feb. 24 will have a one-year tenor.
“Investors may be reluctant to lock-in one-year borrowing costs at the current repo rate, given that it could move lower in coming quarters,” Standard Chartered Plc analysts led by Anubhuti Sahay wrote in a note Tuesday.
The LTROs have sparked to a big rally in short-end bonds, with the yield on 7.32% 2024 bond falling 29 basis points since Feb. 5, the day before the RBI announced 1 trillion rupees of repo auctions. Ten-year yields have declined by 10 basis points.
To contact the reporter on this story: Kartik Goyal in Mumbai at kgoyal@bloomberg.net
To contact the editors responsible for this story: Tan Hwee Ann at hatan@bloomberg.net, Ravil Shirodkar, Anto Antony
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