India’s central bank set dealer-level underwriting floors for two government bond reissues totaling ₹36,000 crore, defining the minimum commitments primary dealers must provide ahead of Friday’s securities sale.
The Reserve Bank of India (RBI) set a Minimum Underwriting Commitment (MUC) of ₹548 crore per Primary Dealer for 7.06% GS 2041, whose notified amount is ₹23,000 crore. For the 7.43% GS 2076, with ₹13,000 crore notified, the minimum is ₹310 crore per dealer. Together, the two securities have a notified amount of ₹36,000 crore.
Those same amounts are the minimum each dealer must bid in the Additional Competitive Underwriting (ACU) auction. The RBI will use a multiple price-based method for that auction, which is scheduled for Nov. 6. The separate securities auction is also set for that date.
Under RBI’s primary dealer guidelines, MUCs are divided equally among dealers and are intended to cover at least half of each issue. The ACU auction allocates underwriting for the remaining portion. The structure gives the Government a backstop if buyer demand falls short, while dealers take on the underwriting commitments.
The guidelines provide commission on underwriting accepted by the RBI even if securities are not ultimately assigned to a dealer. The central bank said commission will be credited to dealers’ accounts on the issue date. The RBI used the same MUC-and-ACU structure for an earlier ₹33,000 crore bond reissue.
The Government’s notification allows it to retain up to ₹2,000 crore in additional subscriptions for each security. It sets Nov. 9 as the payment and reissue date.
