Government Lines Up Rs 6.61 Lakh Crore Bond Sale For Rest Of FY25
In the third quarter, weekly borrowing through Treasury Bills is projected to reach Rs 19,000 crore over 13 weeks.
The government plans to borrow Rs 6.61 lakh crore in the second half of the current fiscal by issuing dated securities, including Rs 20,000 crore of sovereign green bonds.
The bond sale will be completed through 21 weekly auctions, spread over three, five, seven, 10, 15, 30, 40 and 50-year securities, the Ministry of Finance said on Thursday. More than half of these G-Secs will have a tenure of 15 years and more.
The government has budgeted Rs 14.01 lakh crore in gross market borrowing for the financial year 2024–25, in consultation with the Reserve Bank of India. Of this, 47.2% will be raised in the October-March period.
Share Of Bond Issue Including Green Bonds
G-Sec three year tenure: 5.3%
G-Sec five year tenure: 10.6%
G-Sec 10 year tenure: 24.8%
G-Sec 15 year tenure: 13.2%
G-Sec 30 year tenure: 12.1%
G-Sec 40 year tenure: 15.9%
G-Sec 50 year tenure: 10.6%
The government will continue to reserve the right to exercise the greenshoe option to retain an additional subscription of up to Rs 2,000 crore against each of the securities indicated in the auction notifications.
It will also carry out switching or buyback of securities to smoothen the redemption profile.
In the third quarter, weekly borrowing through Treasury Bills is projected to reach Rs 19,000 crore over 13 weeks. This includes the issuance of Rs 7,000 crore in 91-day Treasury Bills, Rs 6,000 crore in 182-day Treasury Bills, and Rs 6,000 crore in 364-day Treasury Bills.
The government taps the bond market to borrow funds to meet its spending commitments as laid out in the budget. It has sold Rs 7.1 lakh crore of bonds so far with Rs 34,000 crore of sale due on Friday, according to Bloomberg.
The borrowing target for the remaining fiscal is marginally higher than year-ago levels, however, a sharp decline in redemptions would entail 32% yearly expansion in the net borrowings to Rs 6 lakh crore in the second half, said Aditi Nayar, chief economist and head of research and outreach at ICRA Ltd.
The rating agency expects India's fiscal deficit to print in line with or mildly trail the budgeted target of Rs 16 lakh crore or 4.9% of GDP, aided by the favourable outlook for revenues and a possible undershooting of the ambitious capex target of Rs 11.1 lakh crore.
"Therefore, the market borrowings appear unlikely to exceed the announced level for H2," Nayar said.
Indian government bonds have emerged as some of the top performers in Asia this year, benefiting from approximately $13 billion in foreign inflows. This surge has largely been driven by the inclusion of domestic sovereign notes in JPMorgan Chase & Co.'s emerging market bond index.
Additionally, expectations of a potential interest rate cut from the Reserve Bank of India, particularly following the US Federal Reserve's recent actions, have further enhanced market sentiment.
