Govt bonds oversubscribed; FPIs bid for Rs 8,541 lakh cr

By: | Updated: April 5, 2016 1:10 AM

Foreign portfolio investors’ (FPIs) appetite for government securities (G-secs) continues to be reasonably strong with the limits at Monday’s auction getting oversubscribed. FPIs bid for `8,541 crore worth of securities against the notified amount of `6,096 crore.

Foreign portfolio investors’ (FPIs) appetite for government securities (G-secs) continues to be reasonably strong with the limits at Monday’s auction getting oversubscribed. FPIs bid for `8,541 crore worth of securities against the notified amount of `6,096 crore.

FPIs have been buyers in the secondary markets putting in $768.20 million in Indian paper over the last two consecutive sessions. On a year-to-date basis, FPIs, however, remain net sellers of Indian debt at $1.23 billion.

At the previous auction, FPIs had put in bids worth `6,810 crore against the notified amount of `5,035 crore.

The lowest bid has risen to 3.65 basis points at Monday’s auction as against 3.32 bps last time. The highest bid or the highest price that FPIs are willing to pay for the limits stood at 15 bps against six bps seen at the last auction. The number of bidders rose to 52 this time around as against 37 in the previous auction.

gr-1

The Reserve Bank of India (RBI) had recently announced the foreign portfolio investor (FPI) investment limits in central and state government securities will be hiked to `2.14 lakh crore in two tranches by July 5.

The investment limits on central government securities for FPIs across all categories has been hiked to `1.40 lakh crore with effect from Monday.

Auctions are conducted when investment limits get hiked or get freed up due to redemptions or sell-off. Regulations say when 90% of the investment limit is reached, the rest of the limit has to be auctioned.

Foreign investors usually bid aggressively to acquire these limits on G-secs with the bid size mostly ranging in multiples of the notified amount. Indian debt is deemed attractive by FPIs given the lucrative yields; especially at a time when yields on sovereign bonds of some of the countries are in negative zone.

Apart from this, investment limits for long-term FPIs like sovereign wealth funds has also been increased to `50,000 crore. As on Friday, FPIs have utilised just 70.91% of this quota.

Investment limits on state development loans for FPIs across all categories has been hiked to `10,500 crore and as on Friday, foreign investors have utilised just 42.64% of this quota.

Get live Stock Prices from BSE and NSE and latest NAV, portfolio of Mutual Funds, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.

Switch to Hindi Edition