India's ultra-long bonds to see ample demand from insurers, pension funds in H2

India's first 50-year government bonds and 30-year green bonds easily absorbed by insurers and provident funds keen to park long-term funds. Govt. aims to raise ₹6.55T through Oct.-Mar .sale, including ₹300 billion 50-year security

India's first-ever issuance of 50-year government bonds and 30-year green bonds can be easily absorbed by insurance companies and provident funds, which are keen and have been looking for avenues to park long-term funds, officials said.

India aims to raise ₹6.55 trillion ($78.73 billion) through the sale of bonds in October-March. This would include ₹300 billion of the 50-year security, the first such auction by the central government.

"Long-term investors like insurers will have a natural demand for the 50-year paper. Most insurance companies require longer-duration bonds for their asset-liability management," said Churchil Bhatt, executive vice president at Kotak Mahindra Life Insurance Co.

"The insurance sector requested the 50-year paper's issuance," he said, adding that the anchor for its pricing would "naturally be the current 40-year bond".

Other market participants like provident funds and pension funds are also likely to actively participate in the bond auction, traders said.

The government also reintroduced green bonds for the second half after pausing it in April-September. It aims to raise ₹200 billion through such notes, half of which would be through the new 30-year papers.

"There are few public sector (companies) issuing longer-term bonds," said Rahul Bhuskute, chief investment officer at Bharti AXA Life Insurance.