Bond Market News

India has now cut the windfall tax offering relief to companies like Reliance Industries (RIL) and ONGC, just a few weeks after had imposing a imposing a windfall tax on oil exports of producers and refiners on July 1.  In the last three weeks, Brent crude oil prices trended lower to $97/bbl before recovering to the current levels $106/bbl. The government cut the windfall tax on diesel and aviation fuel shipments by INR 2/liter ($0.02) and removed a INR 6/liter ($0.07) levy on gasoline exports. Tax on crude oil produced from domestic fields were slashed by 27% to INR 17k/ton ($212.8). Industry consultant FGE notes that returns from processing gasoline and diesel in Asia have decreased in recent weeks and it expects a further downtrend in margins this quarter due to increased supplies. As per FGE, private players such as RIL and Rosneft-backed Nayara Energy Ltd have 80-85% share in India’s gasoline and diesel export. The reduction in these export taxes are expected to provide some relief to these companies.

RIL’s dollar bonds were trading flat with its 2.512% 2026s at 97.33 yielding 3.33%. ONGC’s dollar bonds were also trading down flat with its 3.75% 2023s at 99.75 yielding 4.07%.

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