India said to be eyeing raising $10bn in first overseas bond sale

New Delhi — India is considering an option to raise $10bn in one go from its first overseas bond sale as early as October, according to people familiar with the matter.

The government’s preferred currencies would be yen and euro because yields are lower, but it is also considering dollars as the currency is more liquid, the people said, asking not to be identified as the plan is still under discussion.

India does not plan to hedge the proceeds as that would increase costs, and may still decide to issue the debt in multiple sales.

Finance ministry spokesman DS Malik did not respond to calls.

Bonds gained as the government’s plan to raise $10bn via offshore bonds in one tranche led traders to factor in a large drop in fiscal second-half borrowing. The yield on the benchmark 10-year debt fell three basis points to 6.43%.

The maturity of the bonds could be 10 years or more, the people said. The current thinking among government 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.

Finance minister Nirmala Sitharaman announced the offshore bond sale plan in the annual budget, amid shrinking options to raise funds to boost spending on infrastructure. She also sought to lower the nation’s fiscal deficit target for the current year to 3.3% of GDP from 3.4% previously.

With Subhadip Sircar

Bloomberg