Reuters Market Eye - Barclays Capital advises foreign institutional investors (FIIs) to bid for the long-term government debt category in auction and buy 30-year government bonds, given the potential for further monetary easing and likelihood of bond purchases via OMOs, among other factors.
India is due to auction 666 billion rupees in debt limits on Wednesday, the last auction ahead of the Reserve Bank of India’s (RBI) next policy review in March.
FIIs with licences can participate in these monthly auctions for corporate and government bonds, purchasing quotas which provide them with the right to invest in debt up to the limit bought.
BarCap also advises FIIs to bid for the corporate debt old category in the auction and buy 6-month to 1-year corporate bonds at high yields, as liquidity tends to seasonally tighten in March.
Barclays expects government bond yields to fall 55 bps, in line with another 75 bps of repo easing by the end of June.
Reporting by Subhadip Sircar