Demand for high-yielding Indian government bonds is dwindling, going by the reduced interest seen at an auction on Monday for foreign investors for rupee-denominated sovereign paper. The Securities and Exchange Board of India offered 93.30 billion rupees ($1.40 billion) worth of quota to foreign investors. But foreign investors were ready to pay near zero for the right to buy 1 billion rupees ($15 million) of quota, according to traders who have been interacting with the potential buyers. As expected, foreign investors paid 0.000150 rupees for buying a right to buy a specific amount of government bonds allocated to them in the auction. It was fully sold with total bids received at 94.58 billion rupees.
At the previous auction last month, they paid a fee of 0.0337 rupees, meaning an outlay of $5,000 for a quota of $15 million. In early 2015, they had paid a fee as high as 1 rupee. Until a few months ago, government bonds had been a favourite for foreign investors, but traders said global risk aversion afflicting most emerging markets has dampened the appetite for being invested at the long-end of the Indian bond market. "It's not that investors are drooling over each other to buy government bonds," said Ashish Vaidya, head of trading at DBS Bank in Mumbai. "It'll go at a fairly cheap fee."
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