Benchmark Bond Yield Drops On Lower-Than-Expected Borrowing Plan
The government is planning to raise Rs 7.5 lakh crore through market borrowing in the April–September period of 2024–25.
The yield on the 10-year bond opened lower on Thursday after the Union government announced a lower-than-expected borrowing plan for the first half of the next financial year.
The yield on the benchmark opened 5 basis points lower at 7.02%, according to the data from Bloomberg. It had closed at 7.07% on Wednesday.
The government is planning to raise Rs 7.5 lakh crore through market borrowing in the April–September period of 2024–25 to fund the revenue gap to push economic growth, the Ministry of Finance said on Wednesday. This is lower than last year's gross borrowing estimate of Rs 15.4 lakh crore, which was the highest ever.
FTSE Russell said India's bond index would continue to stay on the index provider's watchlist, once more delaying the countries’ addition to the key gauges.
"Borrowing calendar is a good surprise to everybody," Jayesh Mehta, chief executive officer of DSP Finance, said. Historically, the first half of the fiscal year is always frontloaded, indicating a 57–60% of the borrowing and that would impact liquidity as well, he said. "I won't be surprised if we touch 7% today itself.”