Image Source : Business Standard
The Reserve Bank of India successfully concluded its government securities auction on September 19, 2025, raising Rs 36,000 crore through re-issuance of two benchmark bonds—5.91 percent GS 2028 and 6.33 percent GS 2035. The auction drew robust interest from institutional investors, with competitive bidding volumes far exceeding notified amounts. However, the RBI exercised selective allotment, resulting in partial acceptance across several bids, particularly for the longer-tenure 2035 bond.
The auction was conducted via the RBI’s E-Kuber platform using a price-based multiple bidding method. The outcome reflects a cautious approach by the central bank to manage yield expectations and maintain orderly borrowing conditions amid evolving macroeconomic signals.
Key Highlights From The Auction Results
- Total notified amount: Rs 36,000 crore
- 5.91 percent GS 2028: Rs 6,000 crore
- 6.33 percent GS 2035: Rs 30,000 crore
- 2035 bond received 440 bids worth Rs 762.63 billion; 161 bids accepted for Rs 299.28 billion
- 2028 bond received 91 bids worth Rs 217.41 billion; 6 bids accepted for Rs 59.99 billion
- Partial allotment of 29.73 percent on 41 bids for 2035 bond
- Partial allotment of 87.45 percent on 2 bids for 2028 bond
Breakdown Of 6.33 Percent GS 2035 Auction
The 2035 bond, with a notified amount of Rs 30,000 crore, attracted significant demand, receiving 440 bids totaling Rs 762.63 billion. Of these, the RBI accepted 161 bids amounting to Rs 299.28 billion. Notably, 41 bids were partially allotted at a weighted allotment ratio of 29.73 percent, indicating the central bank’s effort to moderate yield levels while ensuring adequate coverage.
The strong demand for the 2035 bond reflects investor appetite for longer-duration assets amid expectations of stable interest rates. The weighted average yield settled marginally lower than market estimates, signaling confidence in sovereign credit and fiscal discipline.
Breakdown Of 5.91 Percent GS 2028 Auction
The shorter-tenure 2028 bond saw relatively subdued participation, with 91 bids totaling Rs 217.41 billion against a notified amount of Rs 6,000 crore. The RBI accepted only 6 bids worth Rs 59.99 billion, with partial allotment applied to 2 bids at a high ratio of 87.45 percent.
This selective acceptance suggests the RBI’s cautious stance on short-term yields, possibly influenced by inflationary trends and upcoming monetary policy decisions. The weighted average yield for the 2028 bond remained close to the coupon rate, reflecting tight pricing discipline.
Market Implications And Investor Sentiment
The auction outcome underscores the RBI’s balancing act between meeting government borrowing targets and managing yield curve dynamics. Partial allotments, especially in the 2035 bond, indicate an effort to avoid excessive yield spikes while accommodating investor demand.
Institutional investors, including banks, mutual funds, and insurance companies, remain active participants in the G-sec market, using these instruments for statutory liquidity ratio compliance and portfolio diversification. The strong response to the 2035 bond suggests a preference for duration plays amid a stable rate environment.
The next Monetary Policy Committee meeting, scheduled for October 2025, will be closely watched for cues on rate direction, which could influence future auction strategies and investor positioning.
Looking Ahead
With the Rs 36,000 crore auction successfully completed, the RBI is expected to continue its calibrated approach to market borrowing. Future auctions may see similar partial allotments if demand exceeds notified amounts, especially in longer-tenure securities.
Investors will monitor macroeconomic indicators, global bond yields, and central bank commentary to assess the trajectory of Indian sovereign debt markets. The RBI’s ability to maintain demand across maturities while anchoring yields will be key to sustaining financial stability.
Sources: Reserve Bank of India, Economic Times CFO, The Hindu Business Line.
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