Economics

Cash Crunch, RBI Hike Risks Send India Funds to Shorter Debt

Trade conflict, rising local interest rates key drivers
Sovereign debt, triple-A papers of below 5 years sought

Pedestrians walk past the Reserve Bank of India (RBI) headquarters in Mumbai, India.
Photographer: Dhiraj Singh/Bloomberg

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By Subhadip Sircar and Rahul Satija

July 26, 2018 at 9:30 PM UTC

Updated on

July 27, 2018 at 10:35 AM UTC

This article is for subscribers only.

Asset managers in India are buying shorter-maturity debt and triple-A rated corporate paper, as uncertainty about the pace of rate hikes by the central bank and a global trade war add to fear of an impending cash crunch.

Kotak Mahindra Asset Management Co. and Mirae Asset Management Co. are among investors interviewed by Bloomberg that say they’re seeking refuge in debt maturing in less than five years. A liquidity crunch is looming, which would hurt companies seeking to refinance, according to IDFC Asset Management Ltd.