November 20, 2012 / 12:36 PM / 5 years ago

India unused debt limits attract strong foreign investor demand

MUMBAI (Reuters) - India received bids worth 150.69 billion rupees in unused foreign debt limits for government and corporate bonds, more than the 106.16 billion rupees on offer, two market sources said on Tuesday.

The sources attributed the strong demand to the unexpected easing of inflation last month, which has spurred some bets the central bank may consider cutting interest rates as early as in December.

Wholesale prices - India’s main inflation gauge - rose an annual 7.45 percent, the slowest pace since February, according to data last week.

The smaller amount of limits on offer also helped attract stronger demand at the auction, these sources added.

The Indian government is considering a proposal to raise the ceiling on foreign investments in government and corporate bonds by $5 billion each, a senior finance ministry official said, as the country looks to increase vital capital flows.

Reporting by Archana Narayanan; Editing by Rafael Nam

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