Sebis biggest debt auction gets 93% response

Written by ENS Economic Bureau | Mumbai | Updated: Jun 21 2013, 14:56pm hrs
In the biggest sale of government securities this year to foreign institutional investors (FIIs), the Securities and Exchange Board of India (Sebi) has managed to get 93 per cent subscription in the auction for G-secs worth Rs 42,022 crore.

According to investment bankers, 37 firms bid for Rs 39,171 crore, leaving an unsubscribed portion of Rs 2,851 crore.

This time it was the highest amount available in G-sec category and everyone got it at a nominal price, said an invetsment banker.

This was the first auction of debt securities since the government raised the investment limits for foreign investors in government debt by $5 billion to $30 billion earlier this month. The step was taken in a bid to increase foreign fund inflows into the country in the wake of the rupee fall and outflows.

The FII participation comes at a time when FIIs have been withdrawing from Indian debt heavily.

Traders said following the sharp outflow of foreign investment from the domestic debt market, the government has become choosy about the class of investors it wants to draw in to the debt markets. Interestingly, until April, $15 billion of the total $25 billion, was reserved for long-term investors. That classification was removed and now has been re-introduced less than two months later through this increased limit.