Government to sell $5.3 bn in debt to foreign investors

The government will auction Rs29,108 crore (about $5.3 billion) of government debt to foreign investors at an auction on 22 April, in the first auction after the government hiked the debt-holding limit for foreign funds in March.

The finance minister had last month announced the merger of three different limits prescribed for foreign institutional investors (FIIs) to a combined limit of $51 million.

The finance minister also announced that the limits on FII fungibility for securities is going to be $25 billion and the limits for long-term securities as well as old securities will be merged.

The three different limits for corporate and long-term infrastructure bonds that are currently in use will now be merged into one limit of $51 billion.

Altogether, debt limits of Rs4,487 crore in the government debt old category and Rs24,621 crore in the government debt long-term category will be sold to the FIIs.

India will not auction corporate bonds after doing away with auctions for this segment of debt until 90 per cent foreign ownership is reached.

SEBI had last month, auctioned an auction of Rs10,908 crore of bonds to FIIs at an auction for government bonds and corporate debt held on Wednesday, Rs10,908 crore limit was auctioned for government bonds and a limit of Rs5,331 crore was auctioned for corporate bonds, said bond dealers.

However, the demand was for Rs15,375 crore government bonds and Rs6,203 crore for corporate bonds.

For government bonds these limits need to be bought by FII within 30 trading days and the number of trading days allowed to fill corporate bond auction limits is 45 days.