FIIs buy $24-bn bonds in 2014, exhaust 98% limit

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Mumbai | Updated: November 20, 2014 5:21:48 AM

FIIs bought 98.43% of the available $25 billion in government bonds, as of Tuesday.

With foreign institutional investors (FIIs) buying $213-million bonds on Tuesday, total bond purchases so far in 2014 have hit $23.73 billion, surpassing the previous record of $10.05 billion in 2010.

FIIs bought 98.43% of the available $25 billion in government bonds, as of Tuesday, according to data published by the National Securities Depository Limited on Tuesday.

Currently, Rs 1,22,482 crore worth of government bonds have been purchased and leaving only Rs 1,950 crore under the $25 billion limit, according to the data.

With the kind of appetite FIIs have recently shown for Indian bonds, November is set to be the seventh consecutive month of net FII inflows after the $1.85 billion net selling by FIIs in April 2014.

graph-fii

The benchmark 10-year bond yield had ended at 8.15% on Monday, its lowest level since August 2013. The gains on Tuesday were triggered by reports that quoted finance minister Arun Jaitley saying on Monday that the rate cut would benefit the domestic economy.

In July, RBI had raised the limit available for FIIs by $5 billion to $25 billion but kept the overall limit intact by lowering the limits for long-term foreign investors such as sovereign wealth funds. RBI also extended the duration of the investments for FIIs to a minimum residual maturity although it refrained from imposing any lock in.

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