India's bank recapitalisation bonds to state banks will be exempt from the amount lenders must set aside to buy sovereign bonds known as statutory liquidity ratio (SLR), banking secretary Rajeev Kumar said on Wednesday. These bonds worth 800 billion rupees ($12.56 billion) will be issued in 2018 and will not be tradable, Kumar told reporters.
The Indian government unveiled the details of its mega bank recapitalisation plan aimed at tackling record bad debt woes. The bonds will be of 10-15 year tenure and the coupon will be set at a spread over the three-month average yield, he added.
The most traded bond yield eased by 1 basis point to 7.53 percent from 7.54 percent before the announcement, as traders were relieved that the bonds will not eat into the demand for SLR bonds. At 1106 GMT, the bond was trading flat at 7.54 percent.
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