The Debt Wish

Issuers and merchant bankers are stoking the FII's new-found interest in corporate debt by offering innovative structures.

Till less than a year ago, foreign institutional investors (FIIs) considered it risky investment. For the past few months, however, there has been a very major reversal in the stance of many FIIs towards corporate debt in India. No longer is paper issued by Indian corporates considered untouchable. The stability of the rupee over a comfortable period of time has been a prime factor in galvanising this change; in fact, till recently, FIIs were watching the rupee-dollar movements so closely that even the high interest rate scenario prevailing in the country failed to attract investment from this channel. Now that FIIs do feel optimistic about the risk-reward trade off, merchant banking outfits and corporates are capitalising on this opportunity..