India Lowers T-Bill Sales After Tepid Response To Debt Buybacks
India plans to lower short-term borrowings in the current quarter after the recent bond buybacks saw limited interest from the market.
(Bloomberg) -- India plans to lower short-term borrowings in the current quarter after the recent bond buybacks saw limited interest from the market.
The government will sell treasury bills worth 720 billion rupees ($8.6 billion) in the six weeks till June end, the Reserve Bank of India said in a statement Friday. That’s 600 billion rupees lower than the previous plan.
The move may be aimed at lowering the government’s borrowing costs, after the first two buybacks met with little success as the central bank was unwilling to pay the price demanded by traders. The third buyback is scheduled for 600 billion rupees on May 21.
“This is a better solution after the buybacks failed to have the desired impact,” said Debendra Dash, a trader at AU Small Finance Bank. “This will have a positive impact on the short-end as well as the long-end of the curve.”
The government recently borrowed money for three months at 6.9885%, just about ten basis points lower than the 10-year bond yield, highlighting elevated short-term rates.
The administration aims to sell 120 billion rupees each week, compared with an earlier plan to auction 220 billion rupees.
The government is sitting on surplus cash amid slow spending during the ongoing elections and a comfortable revenue position. India’s revenues from goods and services surged to an all-time high of 2.1 trillion rupees in April.
Read: India’s Buyback Plan Runs Into RBI’s Need to Keep Tight Stance
More stories like this are available on bloomberg.com
©2024 Bloomberg L.P.
