Foreign institutional investors have put in bids worth over Rs 39,000 crore ($6.7 billion) to buy government bonds, with a 93 per cent subscription in the largest-ever SEBI-conducted auction for such securities.

The encouraging response, at the auction held yesterday on the BSE, came at a time when FIIs have been pulling out from the Indian debt market heavily.

So far in June, FIIs had made a net outflow of over Rs 21,000 crore from the debt securities, after a net inflow of close to Rs 25,000 crore in the first five months of 2013.

Indian debt markets had witnessed robust interest from FIIs last year as well, when their net investments stood at close to Rs 35,000 crore.

As against the grant of investment limit to FIIs in government debt securities at Rs 42,022 crore ($7.15 billion) on Thursday’s auction, the bids received from FIIs totalled Rs 39,171 crore ($6.7 billion).

This leaves an unsubscribed portion of Rs 2,851 crore, which could be auctioned next month with further available quotas.

Hike in FIIs investment limit

About 37 FIIs had participated in the auction. It was the first auction for debt securities since a hike in the investment limit for FIIs in government debt to $30 billion from $25 billion previously, earlier this month.

Besides, an expert committee has recently recommended to the Securities and Exchange Board of India that the regulator should further ease the regulations governing the registration for FIIs and make it easier for them to invest in India. The proposals are likely to be discussed by SEBI board next week.

The regulator’s auction followed a robust response from FIIs to the sale of government debt worth Rs 5,533 crore last month, attracting bids worth more than Rs 10,000 crore.

FIIs need to bid for investment limits in an auction conducted by SEBI as per the available limits. The auction is conducted on 20th of every month.

Related Topics