RBI's OMOs see strong demand with bids worth Rs 71,194 crore

Synopsis

The RBI's bond purchase OMO witnessed robust demand, with bids nearing ₹71,194 crore against a notified ₹25,000 crore. The 2035 paper attracted the highest interest. Market participants are less aggressive in selling, anticipating further OMOs. Another OMO is scheduled for May 19.

Mumbai: The Reserve Bank of India's open market operations to purchase bonds on Thursday saw strong demand, with market participants offering bonds worth nearly thrice the notified amount. Bids offered for this OMO were worth ₹71,194 crore, versus the notified amount of ₹25,000 crore

The paper maturing in 2035 saw the highest bids worth ₹28,612 crore, while the paper maturing in 2032 saw the lowest bids worth ₹3,735 crore, RBI data showed. The OMO had papers maturing between 2029 and 2036.

"Compared to the OMOs conducted in March, the recent auctions are better received. Market participants, while selling their bonds, are not selling aggressively and hence the discount to market price has reduced," said Rajeev Pawar, head of treasury at Ujjivan Small Finance Bank.

"People seem to be holding back from selling aggressively because there are expectations of further OMOs. We also have another OMO happening on Monday," Pawar said.

RBI will conduct another OMO for ₹25,000 crore on May 19, the last auction scheduled for May so far. The influx of durable liquidity has also reduced short-term rates of treasury bills. The last 2 T-bill auctions saw yields nearly similar across the 3 tenures-91 day, 182 day and 364 day. The cut-off yield for the 91-day bill was at 5.839%, while yield for 182 day and 364 day T-bill was 5.84%.

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