Bond Bonanza: India Unveils ₹360 Billion Auction, New 2035 Security Debuts

Unknown Apr 02, 2026 1,200 Views

The Ministry of Finance has stated that India will be auctioning a large government bond on May 2, 2025, to raise a total of ₹360 billion. The issue will consist of a new 10-year government security and a re-issue of a 6.64% government security due in 2027, as part of the structured borrowing pla...

Brief Introduction

In an effort to provide market stability and address its fiscal needs, the Government of India, in coordination with the Reserve Bank of India (RBI), will auction ₹360 billion of government bonds on May 2, 2025. The auction is part of the overall issuance schedule for April–September 2025, aimed at offering transparency and predictability to institutional and retail investors alike.

Auction Details

Government to sell a combined ₹360 billion of bonds on May 2, 2025.

Offering includes:

₹300 billion of the new 10-year government bond, set to become the new benchmark bond.
₹60 billion of the 6.64% government security due 2027.

Purpose and Market Impact

The sale is included in the government's indicative borrowing schedule for the first half of FY 2025–26 with a total planned issuance of ₹8 trillion of government securities up to September 2025.
The structured schedule of issuance aims to bring stability and facilitate investor planning.
The new 10-year bond is likely to succeed the existing benchmark that currently has a residual maturity of 9.5 years.
The 10-year government bond is used as a reference rate for corporate bonds and is the most traded security in the Indian market.

Investor Participation and Flexibility

Five percent of the notified auction amount is kept aside for specified retail investors under the non-competitive bidding facility.
The government has the flexibility to change the auction calendar, vary notified amounts, and issue different types of instruments whenever necessary.
A greenshoe option provides the government with the facility to keep as much as another ₹20 billion of subscriptions for every security, if there is demand.

Market Outlook

Analysts see bond yields staying firm because of the staggered auction calendar and benign policy cues from the RBI.
There has been robust demand in recent auctions from long-term investors such as provident funds, pension funds, and insurance companies.
The 10-year benchmark bond yield was most recently quoted at 6.36%.

Context and Significance

This auction follows amid continuing geopolitical tensions, which may raise slightly the cost of borrowing for the government.
The government's strategy is to limit market disruption and provide sufficient funding for its fiscal programs.

Sources: Press Information Bureau (PIB), AInvest, Economic Times, Business Standard

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