CENTRE COMPLETES FIRST BUY BACK AUCTION OF HIGH COUPON SECURITIES

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The Ministry of Finance, in cooperation with the Reserve Bank of India, took yet another innovative step today. The first ever buy back auction of high coupon, relatively illiquid government securities was completed by the Reserve Bank of India today, at 2 p.m. In all 131 offers were received, amounting to a total of Rs. 14,434 crore (face value). As these were above the minimum discount of 7.5 per cent, they have been accepted by the Government.

The market value of these securities bought back, amounts to Rs. 19,394 crore. In lieu of the securities repurchased, Government will simultaneously reissue four liquid securities, of the equivalent face value of Rs. 14,434 crore, to the Banks that bid successfully.

There are many noteworthy aspects of this auction. This was an entirely voluntary auction. It was open, on-line and the auction itself was electronic. Of great significance is also the fact that this is a pioneering effort at internal debt restructuring by the Government.