2024-03-27 19:28:23
The sum is lower than the usual borrowing of regarding 57-60% of the total for a fiscal year in its first half. This is in part due to the upcoming elections in April-May, when official spending is expected to decelerate a bit, experts said.
A lower borrowing target for the first half would have a benign impact on bond yields.
Of the projected borrowing, the government will raise ₹12,000 crore via sovereign green bonds in the first half of FY25, the ministry said.
Greenshoe option
It has also introduced a new dated security with a 15-year tenor, citing market feedback and global market practices. “The sharp 15.5% year-on-year fall in the government’s gross supply (of papers) in the first half of FY25, along with the bond index inclusion starting end-June, is expected to augur well for G-sec yields,” Icra chief economist Aditi Nayar said. She expects yield on the 10-year G-secs to ease to 6.8-7% during the first half, from 7.07% on Wednesday.JPMorgan has announced that it will include Indian government bonds in its widely tracked emerging market debt index, starting June 2024. In the interim Budget last month, the government had reduced the FY25 gross market borrowing target to Rs 14.13 lakh crore from Rs 15.43 lakh crore in FY24, as it went on a fiscal consolidation drive.
The borrowing in the first half is scheduled to be over in 26 weekly tranches, each ranging from Rs 20,000 crore to Rs 38,000 crore, the ministry said. The share of borrowing, including through the green bonds, under different maturities will be: 3-year (4.80%), 5-year (9.60%), 7-year (8.80%), 10-year (25.60%), 15-year (13.87%), 30-year (8.93%), 40-year (19.47%) and 50-year (8.93%).
The government also keeps the right to exercise a greenshoe option to retain an additional subscription of up to Rs 2,000 crore once morest each of the securities indicated in the auction calendar. It will continue to carry out switching of securities to “smoothen the redemption profile”, the ministry said. Weekly borrowing through treasury bills in the first quarter of FY25 is expected to be Rs 27,000 crore for the first seven auctions and Rs 22,000 crore for the subsequent six auctions, it said. There will be a weekly treasury bill issuance of Rs 12,000 crore under the 91-day category, Rs 7,000 crore under the 182-day and Rs 8,000 crore under the 364-day brackets in the first seven auctions.
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