India to sell $3.97 bn in debt quotas to foreign investors

India will sell Rs 236.610 billion worth of government debt limits to overseas investors on Monday, amid sharp selling in bonds owing to uncertain policy environment.

Also Read: FIIs pull out Rs 8,500 cr from debt market in 2 weeks

These quotas give foreign investors the right to invest in debt up to the limit bought.

The recent sell-off in bonds come after the Reserve Bank of India raised short-term borrowing costs, restricted funds available to banks and said it would sell Rs 120 billion in bonds on Monday, effectively draining cash from the market, to protect a rupee that had hit a record low last week.

Dealers say demand for the debt limits is expected to be poor as the recent measures have lifted interest rates in the economy wiping out hopes the Reserve Bank of India would cut interest rates in the near term.

Foreign investors have sold USD 1.77 billion in debt so far this month, according to data at the market regulators website.

India will not auction corporate bonds after doing away with auctions for this segment of debt until 90 percent foreign ownership is reached.

The benchmark 10-year bond yield rose more than 50 basis points after RBI measures on Monday.