India to buy back 400 billion rupees worth of bonds, cenbank says

Reserve Bank of India logo is seen at the gate of its office in New Delhi

BENGALURU (Reuters) - India will buy back 400 billion rupees ($4.80 billion) worth of securities, the country's central bank said on Friday.

The securities offered for buyback are 6.18% GS 2024, 9.15% GS 2024 and 6.89% GS 2025, the Reserve Bank of India said in a statement.

"The choice of securities suggests this buyback is a liquidity redistribution exercise by the government as they have clear visibility on their shorter-term funds," said Vivek Kumar, economist at QuantEco Research.

"One could construe this as a yield management exercise, too. However, the RBI has alternate options with direct and indirect signaling potential," Kumar said.

There is no notified amount for the individual securities and the auction will be conducted using the multiple price method, the RBI further said.

"There is liquidity tightness and government expenditure is unlikely to pick up before the new government takes charge. This should also help bring down yields at the shorter end," said Alok Singh, group head of treasury at CSB Bank.

The central bank is also due to pay the government the annual dividend in May, which will further improve the government's cash position.

The auction and its results will be announced on May 9 and settlement will take place on May 10, the RBI said.

($1 = 83.4156 Indian rupees)

(This story has been refiled to add 'rupee' in the headline)

(Reporting by Hritam Mukherjee in Bengaluru; Editing by Shinjini Ganguli)