Bidders get full allotment of corp bond limits as demand remains sluggish

By: | Published: December 15, 2017 3:22 AM

Foreign portfolio investors (FPIs) displayed the unenthusiastic response in acquiring limits for buying corporate bonds in Thursday’s auction, as year-end disinterest ahead of vacations and availability of fresh supply from January weighed.

FPIs, Foreign portfolio investotd, FPI investmentForeign portfolio investors (FPIs) displayed unenthusiastic response in acquiring limits for buying corporate bonds in Thursday’s auction, as year-end disinterest ahead of vacations and availability of fresh supply from January weighed.(Image: IE)

Foreign portfolio investors (FPIs) displayed unenthusiastic response in acquiring limits for buying corporate bonds in Thursday’s auction, as year-end disinterest ahead of vacations and availability of fresh supply from January weighed. Against Rs 7,374 crore of limits made available for auction, FPIs put in bids worth Rs 7,370 crore, falling just a tad short of the limits on offer.  In the previous auction, FPIs put in bids worth Rs 9,071 crore for the auction of limits worth Rs 8,314 crore, indicating an oversubscription of 9%.  The highest bid in the auction on Thursday stood at just one basis point, compared with two basis points in the previous auction.

The number of bidders in Thursday’s auction fell to 40 from 46 in the previous auction. Since the demand was lower than the available amount, there was full allocation of limits, a bond dealer said.  “Foreign investors usually show lacklustre interest during the end of the year, as it is the time when they close their books. The holiday season is also upon us. Moreover, fresh investment limits worth Rs 17,001 crore would be made available in January. As a result, nobody is in a hurry to acquire limits,” the dealer said. Auctions are conducted when investment limits get freed up, either due to redemptions or sales in the market.

Latest depository data shows that FPIs have utilised 96.59% of the permitted quota of Rs 2.17 lakh crore in corporate bonds.  Because of the limits being almost fully utilised, FPI fund infusion into Indian debt has been hovering close to the $23-billion mark in recent times.  According to latest Bloomberg data,  FPI investment into Indian debt stood at $22.93 billion.

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