, Columnist
Getting High on Indian Yield
Low yields and poor disclosure are ignored in the scramble for bonds.
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Perhaps it was the bhang milkshake on their latest trip to New Delhi, but global bond investors are acting a bit odd around Indian junk. Or maybe it's the central bank vice of pumping unlimited amounts of cash into the world that's made them act funny. Whatever, this might be a good time for a detox, possibly in an ashram, to confront some of the real issues faced by the subcontinent.
High-yield companies in India have mostly been prevented from borrowing abroad by rules that set a limit of 5 percentage points over Libor for foreign-currency debt. While there are loopholes (for example if the cash is raised by a foreign subsidiary and isn't repatriated, it's fine) only a handful have accessed international markets.