RBI to issue g-sec shorter duration floating rate notes via uniform price auction method

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The Reserve Bank of India said on Friday that the benchmark government securities (g-sec) of various maturity floating rate notes (FRBs) will be issued using the uniform price auction method.

“After reviewing market conditions and the government’s borrowing program in the market, it has been decided that benchmark securities with terms of 2 years, 3 years, 5 years, 10 years, 14 years and bonds Rates (FRBs) will now be issued using the uniform price auction method,” the RBI said in a statement on Friday.

For the other benchmarks, ie 30-year and 40-year, the auction will continue to be a multiple-price auction.

In a uniform-price auction for the issuance of government securities, all successful bidders are required to pay for the quantity of securities allocated at the same rate, i.e. at the auction limit rate, regardless of the rate they offer.

On the other hand, in a multiple-price auction, the winning bidders are required to pay for the allotted quantity of securities at the respective price/yield at which they bid.

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