Govt likely to go for $10-billion overseas bond sale in October: Report

Current Affairs

The Centre is considering an option to raise $10 billion in one go from its first overseas bond sale as early as October, according to people with knowledge of the matter.
The government would prefer to sell yen or euro-denominated debt so as to offer lower yields, the people said, asking not to be identified as the plan is still under discussion. A dollar bond isn’t ruled out given there would be more liquidity, while it could also decide to sell the debt in multiple sales over a longer period, they said.
India is banking on the novelty of a debut offering at a time when investors are desperate for returns as the world’s pile of negative-yielding debt grows to a record $13.4 trillion. While Saudi Arabia and Argentina have raised more money in recent years from international bond sales as emerging markets return in popularity, Prime Minister Narendra Modi’s government will be working to a tight timeline.
“Market technicals are very strong, and the country is on a positive political trajectory, so why not strike while the iron is hot,” said Todd Schubert, the head of fixed-income research at Bank of Singapore. The surprise would be if there’s no dollar tranche as “one would think that building an Indian sovereign curve would also be a strategic goal, and that can only be done in dollars.” Finance ministry spokesman D S Malik didn’t immediately respond to calls.

 The maturity of the bonds could be 10 years or more, the people said. The current thinking among officials is that a larger sale would be more attractive to investors than breaking the fundraising task into smaller parts, because costs would be lower.The government doesn’t plan to hedge the proceeds as that would increase costs, the people said. The central bank is in agreement with the plan to raise debt overseas...