India’s government maintained its borrowing plan for the remainder of this fiscal year, as higher revenues obviate the need to raise more funds from the market. Bonds were slightly lower.
Prime Minister Narendra Modi’s administration will sell 6.55 trillion rupees of bonds in the October-February period, the Reserve Bank of India said in a statement late Tuesday. That’s in line with expectations and part of the record 15.43 trillion rupees full-year target.
Bond markets are likely to remain supported amid lower net supply, higher demand by long-term domestic investors and optimism stemming from index inclusion, according to Kotak Institutional Equities. “Given the busy election cycle, the risk of fiscal slippage may weigh on bonds, though we do not expect any increase in the market borrowing, for now.”
The government also announced selling a new 50-year tenor bond in response to market demand for ultra-long duration securities, the RBI said. India will sell 200 billion rupees of green bonds in four tranches in tenors of 5-, 10- and 30-years. “On the savings scheme front the government is getting a good amount of collection, whatever may be the deficit they can cover on the small savings side,” said Murthy Nagarajan, head of fixed income at Tata Asset Management.
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