India will sell 7.86 trillion rupees worth of bonds from October to March, with a new focus on longer-term securities and increased green bond issuance, as yields remain under pressure.
India will raise 7.86 trillion rupees through bond sales from October to March, the finance ministry said on Friday, trimming its second-half borrowing plan as it tries to ease pressure on a debt market that has been rattled by higher yields. The revised borrowing schedule leaves full-year gross issuance at 16 trillion rupees, lower than the 16.09 trillion rupees set out for the first half and well below the 17.20 trillion rupees originally pencilled in at the budget, according to reports by Reuters and Indian financial news outlets. The government has already borrowed 8.135 trillion rupees in the April-to-September period, slightly less than planned.
The change in the borrowing mix is likely to matter as much as the headline figure. According to the finance ministry’s calendar, the share of the five-year and 10-year segments has been cut back, while longer-dated securities have been given a larger role. The five-year paper will account for 12.1% of second-half supply, down from 15.4% in the first half, while the 10-year, the benchmark tenor and the largest component of government borrowing, will make up 26.3%, compared with 29% earlier in the year. By contrast, the 15-year and 30-year lines together will represent a greater share of issuance, reflecting consultations with the Reserve Bank of India and feedback from the market, Reuters reported.
The government is also keeping green bonds in the mix. It plans to sell 150 billion rupees of sovereign green bonds in the second half, which would lift total green issuance to 300 billion rupees for the year if the programme is completed as planned. That would be the largest annual volume of green bonds since India began issuing them in fiscal 2023, according to the reports. In the near term, the Treasury bill schedule will remain active, with weekly sales of 230 billion rupees between October and December, a touch below the 240 billion rupees sold each week in the first two quarters.
The timing of the announcement matters because the benchmark 10-year yield has been under pressure. Reuters said India’s 10-year government bond closed at 7.1194% on Friday, marking a sixth straight weekly rise, as traders digested a persistent sell-off in the secondary market. Some dealers said the lighter supply in the most liquid tenors could trigger a modest relief rally, particularly in the five-year and 10-year segments, where demand has been strongest when sentiment improves. VRC Reddy, treasury head at Karur Vysya Bank, told Reuters that the composition of borrowing, rather than the headline cut, could offer some support to those parts of the curve.
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