RBI may auction bonds up to Rs 4 lakh cr soon

Around 60-66% of gross market borrowing by govt expected by September

The issuance calendar for marketable dated securities for April-September is expected this month and 60-66 per cent of the gross market borrowing of the government would be completed by September. This might result in government bond auctions of Rs 15,000-17,000 crore a week in the first half of the coming financial year.

In last month’s vote-on account, Finance Minister P Chidambaram announced gross market borrowing would be Rs 5.97 lakh crore and the net figure would be Rs 4.57 lakh crore for financial year 2014-15.

“The borrowing could be anywhere between Rs 15,000-16,000 crore of government securities per week. About 60-62 per cent of the gross market borrowing of Rs 5.97 lakh crore might be completed in the first half. But when the new government comes to power, it could change the borrowing requirement,” said Dwijendra Srivastava, head of fixed income, Sundaram Mutual Fund.



In the current financial year, ending March 31, the Reserve Bank of India (RBI) auctioned government bonds for a notified amount of Rs 15,000 crore a week. By the  issuance calendar for marketable dated securities for April-September 2013, RBI auctioned government bonds for Rs 3.49 lakh crore.

“There might be about Rs 4 lakh crore worth of bond issuances in the first half of the next financial year. That would be about 66 per cent of the gross market borrowing. The average amount of bond auction to be held every week might be Rs 16,000-17,000 crore,” said Dhawal Dalal, executive vice-president and head of fixed income at DSP BlackRock MF.

Experts believe the new 10-year benchmark government bond might be auctioned only after the new government comes to power. For the time being, there would be more auctions of the current 10-year benchmark bond 8.83 per cent 2023.

By RBI data, the current amount due on the 8.83 per cent 2023 bond is Rs 33,000 crore. The bond was issued on November 25, 2013.

“The new 10-year benchmark government bond might come after the new government comes to power. About Rs 50,000 crore additional issue of this bond (8.83 per cent 2023) may be done,” said  Srivastava.

The yield on the 8.83 per cent 2023 bond ended at 8.74 per cent on Thursday, compared with Wednesday’s close of 8.72 per cent. “The 10-year bond might be issued further due to which the yield could get aligned in the range 8.90-9 per cent,” said Dalal.