India lowers FY27 gross borrowing, to sell debt worth 7.86 tln

Mumbai: In a move to contain rising yields and stabilize the market, the Indian government plans to raise 7.86 trillion rupees through bond sales between October and March, slightly less than initially anticipated. The government's total gross borrowing for the fiscal year is projected at 16 trillion rupees, a decrease from the 16.09 trillion rupees initially announced and the 17.20 trillion rupees unveiled in the budget.

So far, New Delhi has raised 8.1350 trillion rupees in the April-September period, borrowing 65 billion rupees less than planned in a recent auction. The government intends to sell securities maturing in three, five, seven, 15, 30, and 50 years, along with the 10-year bond, which will be the largest share of the borrowing. The composition of the bonds has been adjusted following consultations with the central bank and market feedback.

The longer-duration securities, including the 15-year and 30-year tenors, now account for 26.8percent of the supply, up from 21.8percent.

Traders anticipate a potential buying interest in the liquid five-year and 10-year segments next week, as the liquid portion of the bond yield curve could see some buying after experiencing heavy selloffs recently. Treasury head at Karur Vysya Bank, VRC Reddy, believes that the revised composition will bring relief to these segments, which require more buying interest.

The government will issue 150 billion rupees of green bonds in the second half of the fiscal year, following the strong demand for these environmentally friendly notes during the April-September period. If successful, this would bring the total quantum of green bonds for the year to 300 billion rupees, the highest since India began issuing such notes in fiscal 2023. The 10-year benchmark bond yield in India closed at 7.1194percent on Friday, marking its sixth consecutive weekly surge.