RBI’s Fine Print: Why the 2055 Bond Commands the Highest Underwriting Commission

The Reserve Bank of India (RBI) on Friday fixed the underwriting commissions payable to Primary Dealers (PDs) for key Government of India securities (G-Secs) scheduled for auction. These rates align with current market conditions, ensuring smooth conduct of the borrowing program and efficient subscription to longer-tenure bonds.

Key Highlights:

• 10-year (2028 bond): Commission set at ₹0.0019 per ₹100 of the face value.
• 8-year (2032 bond): Commission fixed at ₹0.0034 per ₹100.
• 30-year (2055 bond): Commission set higher at ₹0.0110 per ₹100, reflecting the longer maturity and higher risk profile.
• The move standardizes returns for PDs and helps balance competitive bidding during the upcoming G-Sec auctions.
• RBI continues to fine tune underwriting norms to ensure robust market participation and liquidity across tenors.
• Market participants note that the rates indicate stable demand for long-term sovereign papers despite global yield volatility.

Sources: Reserve Bank of India (RBI) release, Bloomberg, Reuters