Financial Insights That Matter
By Shubham Batra and Dharamraj Dhutia
MUMBAI (Reuters) -The Indian government is planning to raise 8 trillion rupees ($93.34 billion) through bond sales between April and September that would amount to 54% of its estimated gross borrowing for the upcoming year, the finance ministry said on Thursday.
The market had expected the borrowing to be at 56-59% of the 14.82 trillion rupee target for the fiscal year starting April 1. The government’s latest calendar compares with 53% of the 14.01 trillion rupee target for the same period last year.
The government is also targeting a fiscal deficit of 4.4% of gross domestic output in 2025-26, down from its 4.8% target for the current fiscal.
India’s central government has not introduced any new maturities in the calendar but has raised the share of the benchmark 10-year security to 26% of the total quantum.
It has also raised the size of every auction of the benchmark paper to 300 billion rupees from 220 billion rupees in the October-March period.
The borrowing will be done through bonds with maturities of 3, 5, 7, 10, 15, 30, 40 and 50 years.
New Delhi has also reduced its borrowing through the so-called ultra-long maturity papers of 30-50 years to 35%, down from 38% in April-September last year.
Bond investors had suggested that the government issue fewer ultra-long bonds, or bonds maturing in 30 years or more, due to weak demand at the end of the auction cycle in February. Such papers accounted for around 38% of notes this fiscal year.
The government said it planned to sell 100 billion rupees of green bonds in the next six months. It had sold such bonds worth 200 billion rupees during the October-March period.
The 10-year benchmark bond yield has dropped to its lowest level in more than three years and ended at 6.6022% on Thursday.
Bond yields will decline on Friday, but the 10-year bond could underperform due to elevated supply in this segment, a trader with a private bank said.
Separately, the government will borrow 2.47 trillion rupees through the sale of Treasury bills in April-June, which is sharply below market expectations.
($1 = 85.7040 Indian rupees)
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