Gloom Over India Bonds Overdone If Previous Bank Rescue Is Guide
India's State-Run Banks Soar
This article is for subscribers only.
Issuing special bonds to pay for India’s record $32 billion bank funding plan has added to the gloom in the sovereign debt market. Concerns that an oversupply of securities will cool demand for existing notes may be exaggerated, if what happened two decades ago is anything to go by.
Similar notes were issued to banks in the 1990s as long-tenor, non-marketable bonds, and treated as an off-balance sheet item by the government, Kotak Mahindra Bank Ltd. said in a note. Lenders were allowed to sell them only in fiscal 2007. The current tranche, too, will likely be reclassified in future to minimize market distortion, it said.