By Nikunj Ohri and Dharamraj Dhutia
MUMBAI (Reuters) – India’s government will stick to its budgeted borrowing plan for the current financial year and sell bonds worth 6.61 trillion rupees ($79.06 billion) from October through March, it said on Thursday.
The government had projected gross market borrowing of 14.01 trillion rupees for the April-March financial year in July. Of this, 7.40 billion rupees were scheduled in the first half of the year.
While it is only marginally higher than year-ago levels, a sharp decline in redemptions would entail a 32% on-year expansion in net borrowings to 6 trillion rupees, said Aditi Nayar, chief economist at ICRA.
Borrowing for the second half will be conducted through bonds with maturities of three, five, seven, 10, 15, 30, 40 and 50 years, the government said.
This includes green bonds of 10-year and 30-year maturity worth 100 billion rupees each.
“In order to smoothen repayments of borrowing of two years of pandemic, we would make necessary adjustments in dated borrowings going forward. This approach was adopted in the H2 calendar also,” said Ajay Seth, economic affairs secretary.
Bond yields had declined earlier in the day as some market participants were expecting a cut in the borrowing. The benchmark 10-year yield ended at 6.7178%, its lowest since Feb. 21, 2022.
“We should see some selling pressure tomorrow, as market was almost unanimous on reduction in borrowing, but the rise on 10-year bond yield should be capped,” said Alok Singh, group head of treasury at CSB Bank.
Separately, the government will gross borrow 2.47 trillion rupees through treasury bills.
The T-bill borrowings have been moderated considering the current holding level and estimated cashflows, Seth added.
The gross T-bill issuance was lower than expected showing that the government has preferred to cut the supply of T-bills, instead of dated securities, said Gaura Sen Gupta, an economist with IDFC First Bank.
A government official requesting anonymity said the government will issue new sovereign gold bonds as and when needed.
($1 = 83.6030 Indian rupees)
(Reporting by Nikunj Ohri and Dharamraj Dhutia; Editing by Varun H K)
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