New Delhi: The Indian government has no plan to go slow on its fiscal first-half borrowing schedule and the details of the next auction would be announced later in the day, a top official said on Monday, pushing bond yields higher.
The government usually announces on Fridays its bond auction schedule for the following week but the lack of an annoucement last week had buoyed sentiment in early trade as it raised expectations that the government may pare its borrowing needs.
But a top finance ministry official, who declined to be named, said the scheduled borrowing for the first half of 2009/10, that began in April, would go ahead as planned.
“There is no thinking of slowing down on borrowing. We will follow the (H1) calendar,” the official said.
On 7 August, the government rejected all bids at a Rs12,000 crore auction, in the backdrop of a bank strike. The official said a matching amount would be borrowed in the first half itself.
The government has already announced auctions of Rs6,500 crore of treasury bills on Tuesday.
The central bank’s indicative calendar showed it would auction 120 billion rupees of bonds between 21 August and 28 August.
The benchmark bond yield which had fallen to as low as 7.04% in early trade, rose to 7.08% after the news but is still trading below Friday’s close of 7.11%.
The government had announced it would borrow a total of Rs2.99 trillion in the first half, 66 percent of its full-year borrowing target of a record Rs4.51 trillion.
The cut-off yields of Friday’s 12,000 crore auction were higher than market expectations and two of the three bonds on sales partly devolved on primary dealers, indicating a waning investor appetite for government debt.