Showing robust interest in government bonds among foreign investors, an auction of such debt securities got oversubscribed by over 30 per cent as bids worth Rs 9,361 crore ($1.58 billion) were submitted.
The auction was held for overseas investors at National Stock Exchange's electronic platform for government debt securities worth about $1.2 billion (Rs 7,152 crore), as per the information provided by the exchange.
At the end of two-hour auction this evening, total bids received amounted to $1.58 billion. While the total number of bids stood at 31, 27 of those were declared successful.
The successful bidders have been allocated investment limits for government debt securities worth the targeted amount of $1.2 billion.
With this auction, the total investment cap of close to Rs 1 lakh crore in government debt securities by overseas investors have been reached. Any further investment in this category can take place only after unwinding of positions by the existing investors.
The auction was held as per Sebi regulations, which require that investment limits can be allocated through auction only of the existing investors cross 90 per cent of the overall limit.
Their total investment in government debt has reached Rs 92,394 crore on June 9, which was 92.82 per cent of total permitted limit of Rs 99,546 crore.
Consequently, it was decided that NSE will conduct an auction for allocation of unutilised investment limits worth Rs 7,152 crore in government debts.
NSE and BSE have already asked foreign investors not to increase their positions in interest rate futures (IRF) market as such exposure has also crossed the permitted levels.
These decisions came amid a strong surge in overseas investors interest in Indian bond market.
To boost foreign fund inflows into the capital markets here, regulator Sebi in September last year allowed overseas entities to invest in government securities without any auction till such investments reach 90 per cent of permitted limits.
Once this limit is reached, the auction mechanism now gets triggered for allocation of the remaining limits.
FIIs have invested a net amount of over Rs 52,000 crore in debt market so far in 2014 itself. Equity market has also seen similar trends with overseas fund inflow of over Rs 50,000 crore since the beginning of the year.