Government bond yields that have trended down by over 75 bps since the Union Budget on 29th February could see pressure at lower levels of yields on the back of Rs 150 billion of weekly auctions for the next two months. Indo-Pak tensions, Deutsche Bank issues and US presidential elections are likely to place pressure on bond yields.
RBI has published an indicative calendar for issuance of Government dated securities for the Second half of the fiscal year 2016-17 (October 1st, 2016 to March 31st, 2017).
In the Second half of fiscal 2016-17, the government is scheduled to issue Government Bonds worth Rs 2450 billion. The government gross borrowing is Rs 6000 billion for FY 2016-17, and net borrowing adjusted for redemption is Rs 4,266.70 billion which is 80% of gross fiscal deficit.
Only one security amounting to Rs 669.64 billion is coming up for redemption. On 15th January, 8.07% 2017, outstanding Rs 669.64 billion,will be redeemed.
Gross borrowing for the Second half is 40.83% of total gross borrowing. Last fiscal year, second half gross borrowing was Rs 2340 billion or 40% of total borrowing.
The maturity wise break up of the auction calendar is as follows.
The issuance in the 5 to 9 years maturity category is expected to be around 17.35% of total issuance , in the 10 to 14 years maturity category around 52.04%, in the 15 to 19 years maturity category around 17.35% and 20 years and above maturity category around 13.27% .
From October 1st, 2016 to March 31st, 2017 RBI is scheduled to conduct 17 weekly auctions for government securities each of Rs 140-150 billion.