FIIs get nod to buy $10 bn more of bonds; limit on tenure eased
FIIs lapped up $3.5 billion worth of debt limits at the auction last week and paid high premiums as well. The auction saw bids worth a little over $4 billion.
“Globally, there is an overall dollar liquidity overhang. Of late, the outlook for India has improved significantly,” said P Mukherjee, head of treasury at Axis Bank, explaining the rising FII interest in Indian bonds.
Bankers said the recent fall in bond yields on the back of expectations of interest rate cuts has also triggered a spurt of FII buying.
With tenure restrictions removed, buying in government bonds by FIIs is expected to increase. FIIs have already exhausted their investment limits in government bonds and SEBI didn’t have free limits to auction this month. The enhanced limit of $5 billion will also be quickly lapped up at higher premiums, bankers said.
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