HALISTER1: India’s New Bond Quota May Draw Limited Foreign Demand: Schroder

India’s New Bond Quota May Draw Limited Foreign Demand: Schroder

(Bloomberg) -- India’s move to raise foreign investors limit on bond holdings may draw only limited interest as bond supply will increase in the short term and the market has already priced in a possible RBI rate cut, Rajeev de Mello, Singapore-based investment manager at Schroder Investment Management, says in interview.
  • Limited interest seen in last debt quota auction
    • Bond yields will have to rise further to attract overseas investors
  • Oil prices are turning higher
  • Rupee remains on weakening trend even after recent rallly
  • NOTE: Govt’s fiscal 2017 borrowing starts in April; April- Sept gross borrowing at 3.55t rupees
  • NOTE: Cutoff was at 3.32 bps at March 28 auction vs 4.41 bps on March 8
  • NOTE: RBI to raise foreign investment limit in govt bonds by 205b rupees ($3.1b) over next half year; limit to be raised by 105b rupees from April 4 and by 100b rupees from July 5
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

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Rajeev De Mello (Schroders PLC)

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