Core Viewpoint - The Indian government is adjusting its borrowing strategy, increasing the issuance of 10-year bonds while reducing the overall gross borrowing for the fiscal year, which is expected to lead to increased selling pressure on these bonds [6]. Group 1: Government Borrowing Plans - The government plans to raise 6.77 trillion rupees ($76.38 billion) from October to March, following 7.95 trillion rupees in debt sales from April to September [4]. - More than 28% of the upcoming borrowing will be through the sale of 10-year bonds, with weekly auction sizes increasing from 300 billion rupees to 320 billion rupees [5]. Group 2: Bond Market Dynamics - The yield on the 10-year benchmark note is projected to fluctuate between 6.53% and 6.58%, having closed at 6.5231% on the previous Friday [1][6]. - There is an expectation that the bond yield curve will flatten slightly towards the middle and longer end, indicating a potential shift in investor sentiment [5][6]. - The trader noted that the spreads between longer-term bonds and the 10-year yield should decrease due to anticipated selling pressure on the benchmark paper [2][6]. Group 3: Market Reactions and Indicators - India's overnight index swaps (OIS) are expected to see increased interest payments, influenced by rising 10-year bond yields and higher U.S. Treasury yields [7]. - The one-year OIS rate ended at 5.46%, while the two-year OIS rate settled at 5.45%, and the five-year OIS rate closed at 5.7450% [7].
India 10-year bond set for selloff after government boosts supply in borrowing plan
The Economic Times·2025-09-29 03:10