India Plans $112 Billion of Bond Sales in Fiscal First Half

(Bloomberg) -- India announced the fiscal first-half borrowing plan largely in line with previous years amid a global bond rout and lingering geopolitical uncertainties.

The government will auction 8.45 trillion rupees ($112 billion) of bonds in the six months to September, or about 59% of the full-year target, the ministry of finance said in a statement after close of markets on Thursday.

The borrowing plan may push up yields in the market facing global headwinds from higher crude oil prices and U.S. Treasury yields. Even while the Reserve Bank of India has continued to signal an accommodative stance to support growth, traders still have to contend with a record supply of 14.31 trillion rupees in the fiscal year starting April 1.

“Once the borrowing calendar kicks off, we expect the yields to start hardening in line with the global trends,” even though the interest rates may not be hiked till August, said Aditi Nayar, an economist with Icra Ltd. “10-year yields may cross 7% over the next few week and rise to 7.4% over the course of first half.”

Bonds sold off earlier in the day, with the yield on the 10-year government bond rising by six basis points to 6.84%.

The borrowing will be spread over 26 weekly tranches of 320 billion rupees-330 billion rupees, the government said. The framework for borrowing via green bonds is being worked out jointly by the government and the RBI and will be announced separately, it said.

Following is the break-up of the borrowing:

Tenor	%
2	6.15
5	13.85
7	10.77
10	20
14	15.98
30	13.25
40	13.85
FRB	6.15

The government will also borrow a net 2.4 trillion rupees via Treasury bills in April-June, it said.

Traders are also waiting on the central bank's rate decision on April 8 to gauge how long the RBI can continue its accommodative stance amid price pressures. They would also want to hear how the RBI can support the bond market with the monetary authority having limited scope for bond purchases as it soaks up excess liquidity.

Yields will have a marginal upside bias but will get direction after RBI policy, said Shailendra Jhingan, chief executive at ICICI Securities Primary Dealership Ltd.