Details Of Purchase Programme Announced

Bonds are expected to be supported today after the announcement of purchase programme details, but upside could be limited due to upcoming supply today.

• Markets look ahead to auctions later in the session today, the RBI will sell INR 320bn of debt today, results due after 1030BST/1500IST. The RBI will sell:
  • INR 110bn new 2026 bonds
  • INR 100bn new 2035 bonds
  • INR 40bn 2033 floating rate bonds
  • INR 70bn 6.75% 2050 bonds
• The first purchase of the government securities for an aggregate amount of INR 250bn under the new purchase programme (known as G-SAP 1.0) will be conducted on April. The bank has said the purchases will be split across five maturities, with no targets for specific sectors, but the RBI is said to have chosen liquid securities for the purchases. Bonds that will be purchased:
  • 4.48% 2023
  • 5.15% 2025
  • 6.79% 2027
  • 5.85% 2030
  • 6.22% 2035

• G-SAP 1.0 will run alongside RBI's regular operations, including Liquidity Adjustment Facility (LAF), open market operations (OMOs) and Operation Twist, Deputy Governor Patra has said, adding the programme is built into the central bank's liquidity planning framework for 2021-22 as a whole.
• Some are already having started doubting the effectiveness of the RBI's bond buying plan, among them Standard Chartered who says that INR 5tn per quarter, 5 times the size of what was announced, is necessary to plug the supply and demand gap.