Govt to buy back ~292.5 bn bonds from secondary mkt

The government would be repurchasing ~292.5 billion worth of bonds from the secondary market, using its surplus cash balances, the Reserve Bank of India (RBI) said in a statement. The bonds would have matured at the start of the next financial year, but by purchasing the bonds about a month ago, the government is ensuring that the liquidity shortage, following tax outflow starting March 15, does not impact the banking sector’s liquidity. The RBI had earlier said it would infuse ~1 trillion in the banking system through its liquidity adjustment facilities. The two bonds to be repurchased will mature on April 11 and April 22, respectively. The RBI liquidity infusion and the unexpected government buyback would cool off bond yields, even as the bond market would benefit from retail inflation falling to 4.4 per cent in February, from 5.07 per cent a month ago.