With investor limits for India’s high return sovereign debt almost used up, overseas investors are looking to buy state notes. U.K. headquartered Aberdeen Standard Investments started buying the securities about three months ago and the investment now accounts for about one-fifth of its $312 million Indian bond fund.
Bloomberg Quint says: The highest yields among major Asian emerging markets have made Indian government debt a favorite with overseas investors, who have pumped about $20 billion into rupee securities this year. State bonds, which offer an extra 60-70 basis points of yield over the sovereigns, trade at very similar levels despite differences between the local economies. That’s because the Reserve Bank of India has a zero percent risk rating on the notes, meaning domestic investors treat the unrated securities like federal debt.
Aberdeen’s Lin Jing Leong, a fixed-income investment manager in Singapore said, “We were one of the early asset managers to get into Indian state bonds. We’re definitely seeing others try and get on board.”
