MUMBAI: The Indian government plans to raise 7.86 trillion rupees (USD82 billion) through bond sales between October and March, slightly less than previously planned, as it seeks to contain rising yields and steady the market.
The gross borrowing for the full financial year works out to be 16 trillion rupees (15.995 trillion rupees), down from 16.09 trillion rupees announced in the first half of the financial year and the 17.20 trillion rupees announced at the budget.
New Delhi has so far raised 8.1350 trillion rupees in the April-September period, after borrowing 65 billion rupees less than planned at an auction two weeks ago.
The government will sell securities maturing in three, five, seven, 15, 30, 40 and 50 years, along with the 10-year, which constitutes the largest share of borrowing.
Based on wider consultation with the central bank and market feedback, the share of all four longer-duration securities has been increased, while that of the two most liquid segments - the five-year and 10-year - has seen a sharp reduction.
The five-year and 10-year bonds would comprise 12.1percent and 26.3percent of the borrowings, down from 15.4percent and 29percent, respectively, in the April-September period. The 15-year and 30-year segments have seen the lion’s share of the increase in composition, with these tenors accounting for 26.8percent of supply, up from 21.8percent.
Traders have said that the liquid portion of the bond yield curve could see some buying interest next week, especially after witnessing heavy selloff over the last few sessions.
“Though the borrowing is not a game-changer, the composition will lead to some relief rally in the liquid five-year and 10-year segments, where any buying is much needed,” said VRC Reddy, treasury head at Karur Vysya Bank. The government will sell 150 billion rupees of green bonds in the second half, after witnessing strong demand for such notes in the April-September period.
If successful, that will take the total quantum of green bonds to 300 billion rupees for the year, the highest since New Delhi started issuing such notes in fiscal ‘23.
The government will sell treasury bills worth 230 billion rupees every week between October and December, a tad lower than 240 billion rupees sold on a weekly basis in the first two quarters.
India’s 10-year benchmark bond yield closed at 7.1194percent on Friday, notching its sixth consecutive weekly surge.
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