Zero-Coupon Bonds Take Off in India as Insurers Grow After Covid
- Growing demand for strips is being driven by life insurers
- Insurers still look to be under-invested in bonds: ICICI Bank
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A trade that splits bonds into two parts is picking up traction in India more than a decade after its introduction, a sign the nation’s $1 trillion government debt market is starting to mature.
Life insurers are snapping up more and more so-called strip bonds – securities in which the principal and coupon payments are sold and traded separately — to better match their assets and liabilities, and customize cash flows. Strips, also known as zero-coupon bonds, were first issued in India in 2010 with little success, but volumes are now surging as insurers seize an ever-larger proportion of the market.