Indian bond rally unlikely to attract global funds: PineBridge – Livemint

According to PineBridge Investments, the gains in Indian bonds triggered by the central bank’s measures to ease the debt supply burden in the market will soon subside and foreigners are unlikely to buy unless public finances fail. are improving, according to PineBridge Investments.

“The void in the government’s budget needs to be filled for foreign investors to return for the long term,” said Anders Faergemann, London-based senior financial director at Pinebridge. Weak growth “tends to undermine any hope for a fiscal position, and therefore the RBI’s measures will only work to temporarily support the bond market.”

India’s benchmark 10-year bond is expected to experience its best performance this week since January last year, after the Reserve Bank of India announced a series of measures, including method adjustments accountant of banks to stimulate demand for public debt. RBI move comes as yields hit their highest in four months amid concerns over the government’s balance sheet 12 trillion ($ 164 billion) issuance plan.

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Graphic: Bloomberg

It did little to improve foreigners’ appetite for Indian debt. Global holdings of Indian bonds continue to linger near a record low of 92,500 crore. The prospect of a widening of the budget deficit to more than double the initial estimate, along with fears of a downgrade of the sovereign rating to junk value have pushed foreigners away from one of the most profitable debts in the world. Asia.

Anders of Pinebridge expects RBI’s measures to provide short-term relief. “We expect the uptrend in local bond yields to pick up once the positive technical backdrop wears off,” he said.

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