Government swaps ₹11,302 crore of bonds due by 2029 for longer ones

Economy No. 94 24 October 2026 · 2 min read · By Pranami Hayaran

On 19 October the government swapped ₹11,302 crore of its bonds due in 2027 to 2029 for ₹11,651 crore of bonds due as late as 2060, the RBI's auction result shows. On paper it now owes ₹349 crore more.

That is not a gift to bondholders. The old bond is priced at the previous day's close and the new one at what bidders pay, so the swap is even in market value. The 2027 bond pays 8.26%, above the 7.84% the 2060 bond yields, so it was priced at ₹101.18 and the 2060 bond at ₹92.32. Hence ₹2,000 crore of it became ₹2,192 crore, 9.6% more. Where the new bond cost more, as the 2033 did at ₹101.08, the government issued less: ₹1,966 crore.

What it bought is time. The bonds it took back were due in 1.7 years on average, the new ones in 14.1 years. The cost is a little more interest: on the swapped bonds it rises from ₹825 crore a year to ₹839 crore.

Holders were lukewarm. Of the ₹20,000 crore on offer, only 56.5% was switched, and nobody offered any of the ₹4,000 crore of the 6.03% bond due in January 2029.

So the ₹349 crore is a price gap, not a gift, and the real trade is near repayments for long debt at today's rates. How the government borrows in the first place is in the Macro Brew on how India borrows and lends.

Five pairs of bars, years to repayment of the old bond beside the new bond it was switched into: every new bar is taller, from 6.7 to 33.9 years against 0.8 to 3.2, the 2027 into 2060 pair by far the most.

Five pairs of bars, the old bond taken back beside the new bond issued: the new bar is taller for 4 pairs, most for 2027 to 2060, and shorter for 2029 to 2033.

One bar for ₹20,000 crore split into ₹11,302 crore switched, ₹2,747 crore offered but not accepted and ₹5,951 crore never offered.

Sources