India's Upcoming 10-Year Bond Expected to Exceed 7% Coupon Rate
India's new 10-year bond likely to be issued at above 7% coupon: analysts
The Economic Times
Image: The Economic Times
India is set to issue a new 10-year bond with a coupon rate above 7% for the first time in two years, driven by inflation and global market pressures. The government plans to sell ₹340 billion (approximately $3.57 billion) in bonds, replacing the existing 6.48% 2035 bond.
- 01New 10-year bond expected to have a coupon rate above 7%
- 02Government plans to sell ₹340 billion ($3.57 billion) in bonds
- 03Current benchmark yield is above 7.00%
- 04Outstanding issuance of the 2035 bond is ₹2.26 trillion
- 05Demand for the new bond is anticipated to be strong
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India's new 10-year bond is likely to be issued with a coupon rate exceeding 7%, marking the first increase in two years due to rising inflation and global market pressures. The Indian government will sell ₹340 billion (approximately $3.57 billion) of this new bond on Friday, replacing the existing 10-year benchmark bond which currently has a yield of 7.05%. Analysts, including Harsimran Sahni from Anand Rathi Global Finance, expect the coupon to be set between 7.00% and 7.02% based on current market conditions. The Reserve Bank of India last issued a 10-year bond above 7% in April 2024. The outstanding issuance of the 2035 bond stands at ₹2.26 trillion, the highest for any 10-year debt to date, indicating strong demand for new bonds as they do not carry mark-to-market risks.
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The issuance of the new bond at a higher coupon rate may affect borrowing costs for consumers and businesses, as it signals rising interest rates in the economy.
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