RBI MPC Comment on OMO - Mr. Anshu Kapoor, Senior VP, Edelweiss Financial Services

"An OMO for SDL, the first of its kind, is a welcome move. The higher supply of SDL bonds had resulted in higher spreads, with current spread at ~80 bps vs last year's average of ~45bps. States have borrowed INR 3.5 trillion thus far, and will have to borrow at least another INR 3.5- 4 trillion this year. There is a pressing need for RBI to mop up a significant portion of this. Bond markets will keenly watch for the quantum of this OMO, and an aggressive push will be needed for non-disruptive borrowing by states. Fine print will also throw light on which states are likely to be benefited from this announcement".

Source : Equity Bulls

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