RBI Propose Change To Auction Bidding

Friday's auctions struggled, primary dealers were left to take INR 105bn out of the INR 110bn sale, the RBI did sell a total of INR 345bn against a target of INR 320bn, selling more than targeted of the 6.64% 2035 bond. India's central bank is said to have written to primary dealers proposing a new framework for defining acceptable bids at auction. The RBI wants to define any bids that have a spread of more than two basis points from secondary market yields as outliers, this would allow the RBI to cap bond yields by not accepting outlier bids. Elsewhere, the RBI drained INR 2tn via 14-day reverse repos on Friday at a cut-off rate of 3.46%. Bonds are expected to be supported today by the plans to change bidding methodology at auction.

• Markets await services PMI due later today, as well as a speech from Indian PM Modi at the Co-WIN Global Conclave.