Indian Bonds in Demand as Global Stock Investors Seek Collateral
- Global funds have bought 1-2 year tenor debt for collateral
- These tenors have seen flows of $1.5 billion since September
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India’s sovereign bond market is attracting foreign equity investors, who are using the securities as collateral for trade margin requirements.
The inclusion of the nation’s government debt in JPMorgan Chase & Co.’s emerging- market bond index last month has enhanced their acceptance as collateral. This development is appealing to overseas investors, as they can now earn interest on their bond holdings, unlike with traditional cash or cash-equivalent margin postings.