$19 bn derivative bond trade in India at risk from Modi's new tax

A derivative trade that boosted demand for India’s sovereign bonds by billions is at risk from a proposed tax, piling pressure on a market straining under record government borrowings. 
 

Analysts say a New Delhi plan to tax high-value insurance policies will reduce demand, leading the industry to cut back on bond investments. For the past two years, banks have boosted the amount of debt bought for interest-rate swaps offered to insurers. 

The transactions enabled insurers to lock in future yields without enlarging balance sheets, and by some estimates account for $19 billion worth of sovereign bonds purchased by banks. Should