India will begin talks with
bankers and investors during the week to finalise the
government’s borrowing plan for the second half of the financial
year, with bond traders expected to seek more ultra-long-term
debt supply, four treasury officials said on Tuesday.
The government had set record gross borrowing of ₹17.20
trillion for the financial year in its February 1 budget,
but later cut the target to ₹16.09 trillion after bond
switches.
It plans to raise ₹7.89 trillion ($83.11 billion)
through bonds from October to March, about 49 per cent of the annual
target, after ₹8.20 trillion in April-September.
A common demand is likely to be more longer-dated bonds
given the strong investor appetite, a trader at a primary
dealership said.
All the treasury officials requested anonymity as they are
not authorised to speak to media.
Ultra-long bonds, with maturities of 30 to 50 years,
accounted for 24.9 per cent of April-September borrowing, down from 35 per cent
a year earlier, helping push their yields down about 20 basis
points so far this financial year, compared with an 8 basis
points decline in the benchmark 10-year yield.
Demand from long-term investors like insurance companies and
pension funds has increased in the last few weeks, as their
investment corpus continues to grow, traders said.
“…From an ALM perspective, insurance companies are regular
investors in longer duration bonds,” said Srinivas Rao Ravuri,
Chief Investment Officer at Bajaj Life Insurance.
The insurance industry “is experiencing good growth,” he
added, driven by regulatory support, digital innovation, and
increasing customer awareness.