InvestorQ : Why do foreign investors like to invest in 10-year Indian bonds?
Nikita Damle made post

Why do foreign investors like to invest in 10-year Indian bonds?

image
Neha Samdani answered.
2 months ago
Follow

Earlier this year, The Reserve Bank of India (RBI) decided to open up key government securities to full foreign investment in an attempt to find a place in global bond indices. To operationalize this, the RBI has opened a new window called the ‘Fully Accessible Route’.

Foreign investors were allowed to buy all fresh issuance of 5-, 10-, and 30-year bonds starting April 1 under this category, while five existing papers also became eligible to be held under this route. A number of foreign investors who had so far not invested in India because it wasn’t part of their mandate, were now interested to invest.

The other reason why we see a lot of global interest in Indian bonds is the high return on investment that can be expected as compared to say, the US treasury bonds. They offer significant real returns when most countries offer near-zero or even negative yields. In contrast, government bonds 10-year yields offer nearly 6%.

2 Views