Government Buys Back Only May 2014 Bonds


The government has repurchased bonds worth 10,590 cr. and all of the accepted ones are the 6.07% that is maturing in May 2014.


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I had mentioned the repayment obligations in an earlier post:


Now, what has changed is that the obligation for May 2014 is down to 28,500 cr. This still means that in April+May, the government will need to repay Rs. 69,000 cr. of debt.

The government will not have the money; it will usually issue fresh debt, either as bonds, T-Bills (short term paper) or Ways and Means Advances from RBI. They will not default.

However this can mean that a higher issue of paper is required in order to meet these obligations, and yields will be under upward pressure accordingly.

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Why did the government not buy back any of the other bonds? Those asks may have been at a higher rate than the government wanted to pay. (But I really don’t know)