Multibagger India! Morgan Stanley, Citi ramp up efforts to bring in big fat cheques

Morgan Stanley, Barclays Plc., Citigroup Inc. and Deutsche Bank AG are among institutions that have, or are in the process of engaging with investors as the day for inclusion of nation’s bonds in global debt indexes nears. 

Barclays is reportedly hosting a roadshow with finance ministry and central bank officials in Mumbai and New Delhi this week, while Morgan Stanley is set to hold one in London, after having conducted a roadshow in Asia. 

Citibank has already held calls with global investors regarding operational procedures and is planning additional meetings, a Bloomberg report said.

This flurry of activity comes ahead of the addition of the nation’s sovereign bond market to JPMorgan Chase & Co’s global debt indexes from June, a move that may lure up to $40 billion of inflows. 

Foreigners own just above 2% of the government bonds, leaving ample room for more buyers. India’s bonds are held mostly by local investors and this marketing campaign by foreign banks reflects the nation’s weight in the index, which is at par with China.

Global funds have already begun to increase their holdings of index-eligible bonds since JPMorgan’s September announcement, adding 665 billion rupees ($8 billion) of holdings, data from the Clearing Corp. of India show.

While many large foreign institutional investors have a presence in India, smaller funds are not registered. A targeted approach via calls, roadshows and one-on-one meetings is reportedly being used to lure first-time investors from financial hubs such as Hong Kong, London, Singapore, Dubai and New York.

Some investors have also previously pointed to a lengthy registration process and other operational hurdles around trading the country’s bonds. The outreach effort is aimed at making it easier for foreign investors to put their money to work in local bonds.