The Government of India has announced the sale and re-issue of one Government Securities (G-Secs) 6.94% GS 2036 worth ₹34,000 crore. According to reports from Business Standard, the auction will be conducted using the multiple price method, providing flexibility in pricing mechanisms for market participants. The RBI is also set to auction the 10-year 2036 paper for ₹34,000 crore on Friday, along with announcing its monetary policy decision. As per the latest reports, the underwriting auction will be conducted through multiple price-based method on June 05, 2026 (Friday).
According to Business Standard, the underwriting auction will be conducted through multiple price-based method on June 05, 2026 (Friday). Primary Dealers (PDs) may submit their bids for Additional Competitive Underwriting (ACU) auction electronically through Reserve Bank of India Core Banking Solution (e-Kuber system) between 10:30 A.M. and 11:00 A.M. on the day of underwriting auction. The underwriting commission will be credited to the current account of the respective PDs with RBI on the day of issue of security. The amounts of Minimum Underwriting Commitment (MUC) and the minimum bidding commitment under Additional Competitive Underwriting (ACU) auction, applicable to each Primary Dealer (PD), includes 6.94% GS 2036 for a notified amount of ₹34,000 crore.
According to the government announcement reported by Business Standard, the Government of India will have the option to retain additional subscription up to ₹2,000 crore against each security. This provision allows for potential oversubscription and provides flexibility in determining the final issuance amount based on market demand.
The latest auction announcement comes amid challenging market conditions, with RBI withdrawing its ₹12,000 crore treasury bill auction for 182-day and 364-day maturities due to high yield bids. As reported by The Economic Times, the cancellation effectively curtails government securities supply and lent support to bond prices. The benchmark 10-year government bond yield fell three basis points from an intraday high of 7.04% to 7.01%, and ended at 7.02% on Wednesday. Dealers noted that bids for the 364-day T-bills may have come in at around 6.08-6.12 per cent, against prevailing secondary market levels of around 6.02 per cent, prompting the central bank to cancel the auction.
The RBI's decision to cancel treasury bill sales has been interpreted by traders as a rate signal ahead of Friday's monetary policy decision. According to The Economic Times, the central bank sold only 91-day notes at a yield of 5.56 per cent, while a Reuters poll had forecast cutoff yields for the other two papers at 5.76 per cent and 6.06 per cent respectively. Over the last five weeks, yields have jumped significantly, with 34 bps, 26 bps and 43 bps respectively for the 91-day, 182-day and 364-day papers. A primary dealership trader noted that "this is definitely a rate signal as markets may have started pricing in aggressive rate hikes in a short span of time, which may not be the actual case." The spread between the 364-day notes and RBI policy rate had jumped to 78 bps last week, levels last seen four years ago. Speaking at a Citibank conference, SBI chairman CS Setty said a pause in interest rates at this stage would help stabilise economic conditions and support growth.
