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India Funds Hunt for Spreads, Liquidity as Credit Woes Mount

  • Top-rated corporate bonds preferred for spread over government
  • Some fund managers prefer sovereign paper on liquidity comfort
Updated on

The massive gyrations in the global bond markets and the ongoing credit crisis in India are forcing money managers to seek liquidity in government bonds even as they eye top-rated corporate paper trading at high spreads to the sovereigns.

Tata Asset Management Ltd., Canara Robeco Asset Management Co. and Edelweiss Asset Management Ltd. are preferring top-rated paper issued by state-run firms as the spreads over similar-tenor sovereign remain attractive. The view on what sovereign bonds to buy remains more diverse with Canara Robeco favoring the short-end, while Edelweiss likes the 10-year plus segment.