Further, as per the quarterly indicative schedule for issuance of treasury bills/bonds under the market stabilisation scheme (MSS), 182-day T-bills will now be issued so that an interbank term money market for six months can develop.
As per the issuance calendar for government securities, from April through August 2005, there will be two auctions each, every month with the amount raised varying between Rs 14,000 crore to Rs 16,000 crore. The auctions will see a good mix of medium and long tenor securities being issued.
The Reserve Bank of India (RBI) said, variable rate bonds will account for about 20% of the total issuance, depending upon the market requirement.
The governments budgeted gross borrowing programme this fiscal (at Rs 1,39,000 crore) is estimated to be about Rs 20,000 crore more than last fiscal.
The issuance calendar for the gilts is on expected lines. Typically, the government borrows aggressively in the first half of the fiscal, said M Natarajan, vice president and head of trading (money, forex and derivatives markets), IndusInd Bank.
There is a gap in the term structure of interest rate as no treasury bill of six month maturity is being issued. Currently, only 91-day and 364-day T-Bills are being issued. For arriving at the six months interest rate, the market used to resort to interpolation. Further, the interbank term money market for six months will also develop, he said.
Dealers said that the introduction of the 182-day T-Bill under MSS may be considered as a reintroduction of sorts as the government used to issue it about five-six years back.
As per the quarterly indicative schedule for issuance of T-Bills/bonds under the MSS (for the period April 1 to June 30, 2005), the total issuances of T-Bills (91-days, 182-days, and 364-days) will amount to Rs 32,500 crore as against Rs 35,500 crore in the corresponding period last year.
The issuance this quarter will include a rollover of Rs 24,730 crore. Thus, the net issuance will amount to Rs 7,770 crore.
The issuance of 91-day T-Bills in this quarter will essentially be the rollover of 91-day T-Bills issued in the January-March 2005 quarter. The rollover of 364-day T-Bills issued would also start from April 15, 2005.
However, on account of shortfall in the absorption in 364-day T-Bills auction conducted under MSS on June 23, 2004, the net proposed issuance of 364-day T-Bills will be around Rs 770 crore (face value). Further, the absorption through newly introduced 182-day T-Bills is proposed to be Rs 7,000 crore (face value).