Plans to raise `6.77 trillion via gilts H2

The government plans to raise `100 billion through 30-year sovereign green bonds 

The central government will borrow INR 6.77 trillion through the sale of dated securities in Oct-Mar, it said in a release Friday. With the issuance of INR 7.95 trillion in Apr-Sept, the government has indicated its gross borrowing will be INR 14.72 trillion in 2025-26 (Apr-Mar), INR 100 billion lower than the Budget aim of INR 14.82 trillion.

The issuance will be completed through 22 weekly auctions on INR 280 billion-INR 330 billion, with the Centre's borrowing programme ending on Mar. 6, later than the usual end in February. The government plans to raise INR 100 billion through 30-year sovereign green bonds in the latter half of the fiscal year, it said. It had raised only INR 50 billion through green bonds in Apr-Sept, with the Reserve Bank of India rejecting all bids for another INR 50 billion of green bonds in June. 

"The Government will continue to carry out switching/buyback of securities to smoothen the redemption profile," the government said. On a net basis, the government will issue INR 4.88 trillion of gilts in Oct-Mar, down from INR 5.88 trillion issued until September.  

As is generally the case, the government will conduct the bulk of its borrowing by issuing 10-year bonds. According to the release, 28.4% of the Oct-Mar bond issuances will be through the sale of 10-year paper. This is higher than the 26.2% share in the first half of the fiscal year. 

In line with market and RBI feedback, the government has significantly reduced the share of long-term bonds, Economic Affairs Secretary Anuradha Thakur said after the calendar was released. The government will raise 9.2% of its borrowing in Oct-Mar each through the 30- and 50-year bonds, and 11.1% of the supply through the 40-year bond. The share of the 40-year bond has been reduced by nearly 3 percentage points from the first half. With this, the share of 30-50 year bonds in the calendar is only 29.5%, down from 35.0% in Apr-Sept.