Indian states have never been able to attract dollars to finance their market borrowings. Since October 2015 when state development loans (SDL) were first allowed to be picked by foreign portfolio investors, not more than a trickle has come in. But over the last few months, foreign investors are earnestly avoiding state bonds even though their pockets are filled to brim with central government bonds and even private corporate bonds. Since April, foreign investors have bought only Rs140 crore worth of state bonds while they grabbed nearly Rs40,000 crore of central government securities. The total approved investment limit in state bonds for investors was hiked by Rs6,000 crore in April this year and that of government bonds was hiked by Rs11,000 crore. Foreign investors even willingly bought more than Rs35,000 crore worth of corporate bonds at a time when companies are fixing their over-leveraged balance sheets.
Indian states have never been able to attract dollars to finance their market borrowings. Since October 2015 when state development loans (SDL) were first allowed to be picked by foreign portfolio investors, not more than a trickle has come in. But over the last few months, foreign investors are earnestly avoiding state bonds even though their pockets are filled to brim with central government bonds and even private corporate bonds. Since April, foreign investors have bought only Rs140 crore worth of state bonds while they grabbed nearly Rs40,000 crore of central government securities. The total approved investment limit in state bonds for investors was hiked by Rs6,000 crore in April this year and that of government bonds was hiked by Rs11,000 crore. Foreign investors even willingly bought more than Rs35,000 crore worth of corporate bonds at a time when companies are fixing their over-leveraged balance sheets.
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