RBI Switches Short-Term Bonds To Longer-Dated Debt At Auction

The Reserve Bank of India successfully executed a bond switch auction, aimed at extending the maturity profile of government debt while maintaining fiscal stability. The exercise involved swapping several short-term securities with longer-dated bonds, thereby reducing refinancing risks and aligning debt management with long-term fiscal goals.  

Key Highlights  

• RBI switched 6.97% 2026 bond to 7.50% 2034 debt at 6.7212% cut-off yield  
• 6.97% 2026 bond also switched to 8.32% 2032 debt at 6.7136% cut-off yield  
• 8.15% 2026 bond exchanged for 6.57% 2033 debt at 6.7299% cut-off yield  
• 8.24% 2027 bond switched to 6.57% 2033 debt at 6.7283% cut-off yield  
• 5.74% 2026 bond converted to 7.62% 2039 debt at 7.0296% cut-off yield  
• Government issued ₹153.25 billion and bought back ₹153.68 billion worth of securities  

Strategic Impact  
The bond switch program is a critical tool in India’s debt management strategy, helping to smoothen redemption pressures and extend the maturity profile of outstanding debt. By locking in longer-term yields, the government reduces rollover risks while ensuring fiscal sustainability. Analysts note that such measures strengthen investor confidence and support macroeconomic stability.  

Sources: Economic Times, Business Standard, RBI Press Release