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Fixed Income

91 Day T-Bills Return To Single Digits

Every Wednesday 91 day T-Bills are auctioned, and after Rajan’s first RBI policy, we have a moderation in T-Bill auction yields to 9.7% from the recent highs of over 12%.

91 day T-Bill auction yields

The government accepted about 2.5x of the issue (which was Rs. 7000 cr.) which is part of the game recently.

91 day T-Bill auction size

A higher T-Bill auction size than notified will give the government extra cash. The banks don’t mind – even at the 9.7% rate, it’s higher than the rate they borrow in the MSF window (9.5%) and they can offer the T-Bills as collateral (with a 5% haircut). Of course the difference isn’t much, but this probably even helps make up their SLR as well.

  • Gold Bug says:

    If Max Keiser is to be believed, Ben ( with Big Banks) had scared the hedge funds with taper talks which led to sudden spike in yields everywhere (EMs most affected). Big Banks have been quietly mopping up the bonds thrown foolishly by hedgies. It may again reignite interest in EM Bonds with new entrants coming with leveraged carry trade.

  • Leo says:

    again BEn is not in control …rates are rising coz there is no flight to safety…you really think ben is sucha genius……imagine 5,8% or 8% what it does to the FEDs balance sheet
    Ben knows game is up . like 2012 movie …it is about to go up in flames
    i see crazy spike in rates all over the world

  • Ramamurthy says:

    Does this mean a better deal to the retail investors investing in Debt Funds?

  • Bekxy says:

    The amount accepted over the above the notified amount of Rs 7000 cr in the 91 day T bill auction is under the non competitive facility. Banks would typically bid in the competitive facility. So who are the investors (typically it would be states who deploy their cash surplus) is a moot question

  • mangoman2012 says:

    Deepak,
    I wonder have you read RGR’s speech in Deutsche bank event?
    Can a RBI governor be express such things in open…
    However I like what he said.