LIC's entry into bond FRA market likely to boost long-term G-Secs

With deals across 10 major banks, the insurer's move is expected to spur demand for long-term government securities while narrowing forward spreads for other players

State-owned Life Insurance Corporation of India (LIC) has entered the forward rate agreements (FRAs) market through deals with 10 major banks, both domestic and foreign.

 

Market participants said LIC’s entry into the bond FRA segment is likely to spur demand for long-term government securities. But it may narrow forward spreads, thereby impacting profitability of other market players.

 

“We have deepened our exposure in the quarter (Q1FY26) to FRAs. We have crossed more than 10 banks, including Indian banks. For the time being, we will continue with FRAs,” LIC’s management said in a post-earnings’ call last week.

 

The insurer added that