Govt to issue 50-yr securities, sticks to borrowing plans

livemint.com:

NEW DELHI : The Centre will borrow ₹6.55 trillion for the second half of the ongoing financial year— or 42.45% of its gross market borrowing of ₹15.43 trillion for the full year—the government said, leaving its borrowing plans unchanged. The borrowing for FY24 will be done through dated securities, including ₹ 20,000 crore through issuance of sovereign green bonds, the finance ministry said in a statement Tuesday. While the government will stick to its borrowing plan for the year, it will issue 50-year securities for the first time, in response to a market demand for longer duration securities, the ministry added.

The borrowing programme is finalized in consultation with the Reserve Bank, the ministry said. The Centre has budgeted a gross market borrowing of ₹15.43 trillion in FY24. The borrowing in the second half of the year will be completed through 20 weekly auctions, spread over 3, 5, 7, 10, 14, 30, 40 and 50- year securities, with different shares.

Finance minister Nirmala Sitharaman had in her budget speech for FY24 projected a fiscal deficit of ₹ 17.86 trillion accounting for 5.9% of the nominal gross domestic product (GDP). The Centre is targeting a fiscal deficit below 4.5% of GDP by FY26. The share of borrowing (including the green bonds) under different maturities will be: 3 year (6.11%), 5 year (11.45%), 7 year (9.16%), 10 year (22.90%), 14 year (15.27%), 30 year (12.21%), 40 year (18.32%) and 50 year (4.58%).

Switching of securities will be carried out to smoothen the redemption profile. Out of the ₹1 trillion of budgeted (budget estimate) switch amount, ₹ 51,597 crore of switch auctions have already been conducted. The remaining amount of switch auctions will be conducted in the second half.