India corporate bonds attract foreign investors chasing yield

Finance


Data source: National Securities Depository Limited

And there are no signs of stopping, given how bonds from Asia’s third-largest economy provide some of the highest returns in today’s investment climate, fund managers said.

India has frequently been cited as an attractive emerging market for investments in both the debt and equity space by money managers such as BlackRock and Citi Private Bank.

“Yes, there is still a case for adding Indian bonds,” Wontae Kim, research analyst at Western Asset Management, told CNBC in an email. “India offers a mix of relatively high yields, a firm political mandate, improving fundamentals and FX stability that few markets can.”

The average fixed coupon rate of Indian corporate debt issued from January to July 2017 is at 7.27 percent, according to data provided by Dealogic. That is lower than Indonesia’s 9.16 percent, but it exceeds other emerging markets such as Mexico, Brazil and Malaysia.

That hunt for yield have led to net foreign investment inflows of 1.13 trillion rupees ($17.65 billion) into the Indian debt space from January to July 2017, compared with a net outflow of 47.24 billion rupees a year ago, data by India’s National Securities Depository Limited showed.



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