The Deposit Insurance and Credit Guarantee Corporation (DICGC) has sold short-dated government securities for value September 15 to the tune of over Rs 400 crore in the secondary market yesterday.
"This was possibly to meet requirements for payment on account of advance tax or settlement of pending tax claims," said players.
Significantly, the corporation sold securities worth Rs 550 crore only as recently as July 30.
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The securities have been offloaded at very attractive yields, compared with the current market rates. It sold the 11.75 per cent 2001 at a price of Rs 100.46 (11.60 per cent), the zero coupon 2000 maturing on July 13 at Rs 81.70 (11.37 per cent), the 12.14 per cent 2000 at Rs 101.40 (11.19 per cent ), the 11.64 per cent 2002 at Rs 100.50 (11.32 per cent) and the zero coupon 1999 at an yield of around 10.60 per cent, said sources.
Interestingly, the securities were mopped up mainly by foreign banks which are the collecting banks for the Resurgent India Bonds issue, and primary dealers.
The corporation, which is a subsidiary of the Reserve Bank of India seems to be directly competing with its parent, which recently included short dated securities on its sale list, with the idea of providing the collecting banks an avenue for deployment of their proceeds.
The yields offered by the RBI however, are still much below the market yields and hence the foreign banks may have gone in for purchase of securities from DICGC at the attractive yields it was offering, said market players.
This is in spite of RBI providing a refinance facility against the securities purchased through its open market operations.
For instance, the zero coupon 2000, maturing on February 3, 2000 is being offered by the central bank at a yield of 9.70 per cent, while the zero coupon maturing a year earlier was sold by the corporation at a higher yield of around 10.60 per cent.