India’s ultra long-dated government bonds experienced a boost on Monday following the Reserve Bank of India’s (RBI) unexpected announcement to purchase 25-year bonds as part of an upcoming debt acquisition, marking the inclusion of the longest-dated securities in its purchase program.
The RBI plans to buy bonds amounting to up to ₹50,000 crores on Thursday, including a bond maturing in 2050. Another similar purchase is scheduled for December 18, leading traders to speculate that ultra long-term bonds will again feature in that round of purchasing.
The significance of this move is underscored by recent conditions in the ultra-long bond market. A demand-supply imbalance has affected these bonds for several months, even as the government has reduced the frequency of such auctions during the October to March period. Investor appetite has waned, particularly among insurers and pension funds, which have reduced their purchases significantly this year.
Yields on bonds with maturities of 30 years and longer have risen by 25-30 basis points in 2025, a period during which the RBI has cut interest rates by 125 basis points and engaged in bond purchases worth ₹4.84 trillion. The central bank’s decision to acquire these bonds as part of its open market operations aims to stimulate demand for these securities and alleviate upward pressure on yields, market participants noted.
From a numerical perspective, the central government plans to issue 30-to-50-year bonds totalling ₹127,000 crores from December through March. Concurrently, the RBI is projected to purchase approximately ₹2 trillion in bonds during the same timeframe.
Market response has been favorable, with yields on the 30-year 7.24% bond due in 2055 and the 40-year 6.90% bond due in 2065 both declining by about 3 basis points on Monday. This decline reflects optimism regarding improved demand and the anticipated inclusion of ultra-long bonds in forthcoming open market operations.
Abhishek Upadhyay, a senior economist at ICICI Securities Primary Dealership, commented, “This signals that the RBI is prepared to challenge traditional conventions by extending its purchases towards the longer end of the yield curve.” Gaura Sen Gupta, chief economist at IDFC First Bank, noted that while demand from investors such as insurance and pension funds remains lackluster, there is still a considerable supply of long-duration bonds available. “The inclusion of the 2050 bond highlights efforts to rectify the supply-demand imbalance in the ultra-long bond segment,” she added.
($1 = 90.0975 Indian rupees)
Published on December 8, 2025.
