Govt bonds over-subscribed; FPIs put in bids worth Rs 17,266 cr

New Delhi: Signalling robust demand for government bonds, an auction of debt securities Monday attracted bids of staggering Rs 17,266 crore from foreign investors -- three times higher than securities put on offer.

The auction was held at BSE's ebidXchange platform for allocation of Foreign Portfolio Investors (FPIs) investment limits in government debt securities worth Rs 5,600 crore saw bids for Rs 17,266 crore, as per the bourse.

At the end of two-hour auction this evening, 32 bids were declared successful, as per the information available with BSE.

The debt auction quota gives overseas investors the right to invest in the debt up to the limit purchased.

During earlier auctions, government bonds have always been subscribed multiple times, given the huge interest among foreign investors, while the demand for corporate bonds remains less.

Foreign Investors will be able to invest an additional USD 2.6 billion (Rs 16,431 crore) from today onwards in various government securities, including those of the states.

Out of this, investment limits worth about Rs 5,600 crore are being allotted through an e-auction, while the rest would be available on tap.

In further opening up, the limits would be enhanced by another Rs 16,600 crore from January 1 ownwards.

This follows decisions by the RBI and Sebi earlier this month to allow greater foreign fund flows into the government securities, which are generally favoured by FPIs over the corporate bonds in India.

The cap has been now raised to Rs 1,70,000 crore from Rs 1,53,569 crore previously. As against the previous limit, the total investments by FPIs in government bonds stood at Rs 1,53,109 crore (USD 23.6 billion) as on October 9, as per data available with the NSDL (National Securities Depository Ltd).

In comparison, the total investments by FPIs in corporate bonds stood at Rs 3,39,660 crore as against a cap of Rs 4,14,323 crore.