Sebi to auction Rs 10,000-cr debt investment for FIIs

Enthused by growing interest of foreign investors in debt securities in the country, market regulator, the Securities and Exchange Board of India (Sebi), will conduct an auction this week for investment worth Rs 10,000 crore by foreign investors.

The auction will be conducted on Tuesday in both the government and corporate debt securities.

There are individual caps on investment by foreign institutional investors (FIIs) in each category and Sebi conducts monthly auctions for the available limits within these caps.

At the last month’s auction, FIIs had bid aggressively for both government and corporate bonds. Incidentally, FII investment in the Indian debt market hit its eight-month high level of Rs 7,852 crore ($1.5 billion) last month.

A higher amount of Rs 10,016 crore was invested by FIIs into the Indian debt market in February this year.

This month, Sebi is conducting auctions for government and corporate debt security investments worth a total of Rs 10,616 crore or $1.9 billion.

Sebi has relaxed norms for FIIs’ debt investment by allowing them to avail the limits in corporate debt (long-term infrastructure category) without obtaining its approval till overall FII investments reach 90 per cent of a prescribed cap of $12 billion (Rs 53,806 crore).

After 90 per cent of this limit, FIIs would need to bid through an auction mechanism for allocation of the remaining limits or Rs 5,381 crore in this category. From Sebi data, an investment limit of Rs 26,000 crore was available in this category as on October 31.

There are two categories of government debt bonds, with $10 billion of FII investment cap in each of these, while different categories of corporate debt securities face investment limits ranging from $1 billion to $20 billion.