Foreign Investors Shift to Short-Term Indian Debt as 5-Year Yields Jump 55 Bps
Updated
Updated · Reuters · Jun 4
Foreign Investors Shift to Short-Term Indian Debt as 5-Year Yields Jump 55 Bps
3 articles · Updated · Reuters · Jun 4
Summary
More than two-thirds of the top 10 Indian government bonds bought by overseas investors in March-May had maturities under five years, up from less than half in January-February.
A 55-basis-point rise in five-year yields from March to May outpaced the 10-year bond's 34-basis-point increase, flattening the curve to a 15-basis-point spread and making short-dated debt more attractive.
The move reflects bets that the RBI is nearing a policy turn as the Iran war's energy shock lifts inflation and pushes investors toward lower-duration risk.
Foreign investors bought 221 billion rupees of bonds in January-February, sold a record 177 billion rupees in March, then returned as buyers in April-May ahead of Friday's RBI decision.
Most economists expect the RBI to hold rates this week, though Standard Chartered has forecast a 25-basis-point hike, underscoring how quickly tightening expectations have built.