New Document top_band
 
Business Standard

Sebi's Rs 10k FII debt auction gets good response

Read more on:    Fiis | Sebi | Fii Debt Auction | Reserve Bank Of India
Related News

The over Rs 10,000-crore auction for foreign institutional investors (FIIs) debt limits today attracted healthy demand on the back of improved investor sentiment following certain relaxations by the Securities and Exchange Board of India (Sebi).

The auction attracted total bids worth Rs 15,069 crore, against Rs 10,616 crore on offer. The cut-off bids, the premium paid by to acquire bond buying permits, saw sharp jump over last month.

The ‘government old’ category, which has no investment restrictions, saw demand worth Rs 2,842 crore against Rs 1,094 crore on offer and the cut-off bid came in at 10.50 basis points (bps) versus 5.30 bps seen last month. Even corporate bonds with no restrictions saw good demand and high cut-offs.
 

GOOD SHOW
Category Government 
old
Government new
long term
Corporate
old
Amount available
for auction (Rs cr)
1,094 4,451 5,071
Highest bid (bps) 12.00 0.20 8.65
Cut-off (bps) 10.50 0.08 6.45
Previous cut-off (bps) 5.30

Full allocation

5.80
Total demand (Rs cr) 2,842 5,296 6,931
Source: Dealers

Market experts said FIIs bid aggressively with the view that may announce a bond buy back programme and soon start relaxing interest rates. Also, easing of debt allocation criteria by allowing FIIs to carry forward half of their debt holdings to the next calendar year by in October helped improve FII sentiment.

The strong demand from FIIs at today’s action comes in the wake of reports the government is considering raising the FII investing ceiling in government and corporate bonds further by $5 billion each.

Currently, the total investment limit for FIIs in the domestic debt market is about $66 billion, distributed through a number of categories across government, corporate and infrastructure debt, some of which impose tenor or lock-in restrictions.

FII investment limits in the debt market were revised in November 2011 and June this year to help bring down the current account deficit. The current limit for FII investment in gilts is $20 billion (of which $10 billion has residual maturity of three years). For corporate bonds, it is $45 (of which $25 billion is in long-term infrastructure bonds).

Foreign investors are mostly attracted to categories with no investment restrictions, such as government old and corporate old. Categories, including infrastructure corporate bonds, which have lock-in restriction, have proved to be unpopular among investors.


(With Inputs from Reuters)

Read more on:   
|
|
|

Read More

Sebi exempts CARE Ratings from IPO grading process

The Securities and Exchange Board of India (Sebi) has exempted rating agency Credit Analysis and Research (CARE Ratings) from the mandatory grading ...

Quick Links

 

Market News

Refined soya oil up 0.3% on upsurge in demand

Oil for delivery in September traded higher by 0.24%

Inflation may lead to marginal rise in wheat MSP

The MSP is expected to be around 1,420-1,450 per quintal

Crude palm oil rises 0.16% as demand picks up

Traders create fresh positions on positive sentiment

Cashew processors in Odisha demand govt support

Seek overseas buyer arrangements, port & container facilities and financial backing to compete with exporters from other states

Deepak Fertilisers slips on weak June quarter results

The stock dipped 7% to Rs 166 after reporting 7% yoy decline in net profit at Rs 40 crore for the quarter ended June 2014.

Back to Top