Borrowing Plan Unchanged

Short end bonds gained yesterday after the government kept borrowing plans unchanged amid speculation of an increase to address local government revenue shortfall due to the pandemic. The government kept the fiscal year borrowing amount unchanged at INR 12.05tn, 2H borrowing will be slightly larger than initially planned at INR 5.03tn, due to lower borrowing in 1H. The unchanged borrowing plan rebuts comments from Finance Minister Sitharaman who said that borrowing could be up to INR 1.6tn higher than initially thought. Bonds could still come under pressure during today's session after US yields hit the highest levels since June while crude futures have continued their rally into a sixth day. Elsewhere markets await an INR 2tn 7-day reverse repo auction today, while Indian finance ministry officials are said to be meeting representatives from Moody's rating agency today and plan to pitch for a sovereign rating upgrade.