India to begin borrowing talks this week as traders seek more ultra-long bonds

MUMBAI: India will begin talks with bankers and investors during the week to finalise the government’s borrowing plan for the second half of the financial year, with bond traders expected to seek more ultra-long-term debt supply, four treasury officials said on Tuesday.

The government had set record gross borrowing of 17.20 trillion rupees for the financial year in its February 1 budget, but later cut the target to 16.09 trillion rupees after bond switches.

It plans to raise 7.89 trillion rupees ($83.11 billion) through bonds from October to March, about 49% of the annual target, after 8.20 trillion rupees in April-September.

A common demand is likely to be more longer-dated bonds given the strong investor appetite, a trader at a primary dealership said.

All the treasury officials requested anonymity as they are not authorised to speak to media.

Ultra-long bonds, with maturities of 30 to 50 years, accounted for 24.9% of April-September borrowing, down from 35% a year earlier, helping push their yields down about 20 basis points so far this financial year, compared with an 8 basis points decline in the benchmark 10-year yield.

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Demand from long-term investors like insurance companies and pension funds has increased in the last few weeks, as their investment corpus continues to grow, traders said.

“…From an ALM perspective, insurance companies are regular investors in longer duration bonds,” said Srinivas Rao Ravuri, Chief Investment Officer at Bajaj Life Insurance.

The insurance industry “is experiencing good growth,” he added, driven by regulatory support, digital innovation, and increasing customer awareness.