(Bloomberg) -- India’s government maintained its borrowing plan for the remainder of this fiscal year amid robust foreign inflows spurred by global debt inclusion.
Prime Minister Narendra Modi’s administration will sell 6.61 trillion rupees ($79 billion) of bonds in the October-March period, the finance ministry said in a statement on Thursday. That’s broadly in line with the budgeted estimates as per the annual borrowing program.
Indian bonds are among the best performers in Asia this year, supported by foreign inflows of about $13 billion so far, largely spurred by the inclusion of sovereign notes into JPMorgan Chase & Co.’s emerging market bond index. Hopes of a rate cut from the Reserve Bank of India, especially after the recent move by the Federal Reserve, have also boosted sentiment.
Bonds with 15-year tenor and above make up nearly 52% of the borrowing plan amid strong demand for longer-maturity paper from pension and insurance companies.
“Some steepness in the curve might come.” as long-bond borrowings remain unchanged, said Naveen Singh, head of trading at ICICI Securities Primary Dealership Ltd. “The build-up is going to be strong into the policy meet in October.”
Robust revenues and a slower pace of expenditure due to a months-long election in the fiscal first quarter to June also meant reduced demand for funds. Supported by faster economic growth, New Delhi estimates a fiscal deficit of 4.9% of the gross domestic product in the fiscal year to March 2025, the lowest in five years.
Bonds have also rallied on lower oil prices. The yield on benchmark 10-year bond has declined by more than 40 basis points this year, among the most in Asia’s biggest economies. The yield fell to as low as 6.71% on Thursday, a level last seen in February 2022.
The RBI is scheduled to meet in early October with traders expecting a pivot to a more dovish policy. Governor Shaktikanta Das has said the monetary authority won’t cut interest rates unless inflation sustainably moves toward the 4% mark.
The government has sold 7.1 trillion rupees of bonds so far with 340 billion rupees of sale due on Friday. About 110 billion rupees of greenbonds were unsold in the first half.
Weekly borrowing through issuance of treasury Bills in the third quarter of the fiscal year is expected to be 190 billion rupees, the government said.
(Updates with trader’s comment in fifth paragraph, more details)
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