MUMBAI: Indian government bond yields rose on Monday, as states announced a heavy borrowing plan for the last week of the current financial year and market participants awaited the April-September borrowing calendar.
The 10-year benchmark 7.26% 2032 bond yield was at 7.3251% as of 10:00 a.m. IST, after closing at 7.3128% on Friday. Indian markets are closed on Thursday for a local holiday.
Indian states aim to raise at least 407.14 billion rupees ($4.94 billion) through the sale of bonds on Tuesday, 70% higher than the planned schedule and the highest-ever by states for a single auction, according to traders.
“Market has corrected slightly to digest the aggressive borrowing target from states at the fag end of the year, but since most of the issuance is not in the liquid 10-year category, the impact is limited,” a trader with a primary dealership said.
Market participants await the Indian government’s borrowing calendar for April-September, which is likely to be released by the end of this week and is expected to be a key market mover.
The government’s borrowing for the first half of the coming financial year is likely to be between 55% and 58% of its gross annual borrowing target of 15.43 trillion rupees, government officials had told Reuters earlier this month.
The government is likely to meet central bank officials to discuss a plan later in the day.
India bond yields little changed as traders eye fresh triggers
States have raised 7.17 trillion rupees through the sale of bonds in the current financial year, while the central government has raised 14.21 trillion rupees.
Apart from the calendar, the Reserve Bank of India’s monetary policy decision, due on April 6, will be a major trigger.
Even as many market participants expect the central bank to go for one more 25 basis point (bps) hike before a prolonged pause, State Bank of India expects a status quo on rates.
The RBI has raised the repo rate by 250 bps to 6.50% in the current financial year.
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