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Extra Fiscal Support Measures Announced

INDIA

Bonds are expected to open higher today, moving in tandem with US tsys and boosted a decline in crude oil prices. Markets await today's INR 206bn state debt state for demand cues ahead of this week's sovereign debt auction.

  • The RBI announced it will sell a total of INR 320bn of debt at this week's auctions:
    • INR 110bn 5.63% 2026 bonds
    • INR 40bn 2033 FRBs
    • INR 100bn 6.64% 2035 bonds
    • INR 70bn 6.67% 2050 bonds
  • Yesterday India announced an expansion of support measures for the economy, including an additional 50% in its emergency credit program to INR 4.5tn and widening its scope to the tourism sector alongside healthcare and airlines. FinMin Sitharaman also said the government would scale up medical infrastructure and provide micro-financing to 2.5m people, among other measures. While the total package is INR 6.3tn analysis from Deutsche Bank note that most of the measures announced are in the form of credit guarantee schemes and contingent liabilities, which speaks to the limited fiscal headroom available to India. This could weigh on bonds as it implies that India could be forced to increase bond issuance in order to further support the recovery. The bond market had a tantrum in February after a larger than expected borrowing plan was announced.

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