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Informist, Friday, May. 2, 2025

--RBI: Switched 2 bonds worth INR 373 bln with govt 

--RBI: Switched INR 149.00 bln worth of 5.63%, 2026 bond with govt 
--RBI: Switched INR 224.00 bln worth of 6.97%, 2026 bond with govt 
 

NEW DELHI – The Reserve Bank of India on Wednesday switched two bonds worth INR 373 billion maturing in 2026-27 (Apr-Mar) with the government, the central bank said Friday. This is the first time that the RBI and the government have conducted a bilateral switch since January 2023.

A switch operation entails replacing a security maturing in the near term with a longer-maturity paper, effectively postponing the government's debt repayment to a later date, and is cash neutral for the government. The RBI sold INR 149 billion of the 5.63%, 2026 gilt and INR 224 billion of the 6.97%, 2026 gilt to the government. Both the bonds were switched with the 8.33%, 2036 gilt, with the government issuing INR 326.97 billion of the longer term bond.

The transaction was settled Friday. The switch was conducted as per the indicative prices given by Financial Benchmarks India Ltd. on Tuesday. The RBI sold the 5.63%, 2026 bond at INR 99.66, and the 6.97%, 2026 bond at INR 101.22. The 2033 bond was issued at INR 114.76 to the RBI. 

The Union Budget for FY26, presented in February, pegged the gilt switch target at a record INR 2.50 trillion from INR 1.47 trillion in the financial year ended March. So far this financial year, the government has switched INR 226.11 billion through an auction with market participants in April. The Budget estimate of gilt switch operations does not factor in any bilateral debt swap with the RBI, Economic Affairs Secretary Ajay Seth had said in February, adding that the Indian government will treat bonds held by the central bank as all other redemptions.  End

Reported by Aaryan Khanna

Edited by Akul Nishant Akhoury

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