The central government will borrow Rs 8.00 tn and Rs 5.93 tn on gross and net basis respectively in H1 FY26.
Download ReportQuantEco Research || H1 FY26 g-sec borrowing calendar: Fine-tuning at the margin
The central government’s H1 FY26 issuances will constitute ~54% of FY26 g-sec borrowing (gross) target, marginally higher than ~53% seen in H1 FY25. Months of May-25 and Apr-25 would see the min and max issuances respectively on net basis. From duration perspective, (i) short dated papers will see a minor increase in issuances, (ii) share of issuances at the belly will the highest in recent years, and (iii) share of issuances at the extreme long end of the curve will see a drop.
The RBI’s recent pivot on monetary policy and liquidity along with expectation of further easing (we expect the MPC to announce a 25 bps rate cut and a shift in policy stance to accommodative in Apr-25 policy review) will help support demand at the short and medium tenors. Demand from FPIs is also likely to remain supportive amidst India’s inclusion in the EM bond indices (net FPI inflow of USD 16.8 bn in FY25 so far is the highest in 7 years). The 10Y g-sec yield has recorded two successive years of decline (26 bps and 45 bps in FY24 and FY25 respectively). We continue to expect further moderation, with a target of 6.40% by Mar-26.