Mumbai: India attracted 49.63 billion rupees ($814.61 million) worth of bids from foreign investors in its auction of government debt limits on Thursday, much higher than the 30.17 billion rupees on offer, according to two dealers.
The cutoff was 5.7 basis points (bps), much higher than the 0.0036 bps seen in the previous auction for 32.08 billion rupees last month.
Traders attributed the stronger demand to expectations that any increase in unrestricted debt limits for foreign investors would not happen anytime soon, making these auctions the only sure way to ensure allocation of Indian debt.
Although foreign investors can buy up to $25 billion in government debt without restrictions, India resorts to auctions once they reach 90 percent of that limit.
These auctions sell bond quotas that provide foreign investors the right to invest in debt up to the limit bought.
Foreign investors have piled into Indian debt amid rising confidence in the country`s economic growth prospects and the central bank`s strong fight against inflation.
