The market regulator Securities and Exchange Board of India (SEBI) will be conduct an auction for investment of Rs. 10,000 crore in debt securities for foreign institutional investors (FIIs).
The auction, where there is an individual cap on investment by FIIs, would be conducted on Tuesday and both government and corporate debt securities would be included.
The total auction value is Rs. 10,616 crore. The auction is expected to be received well by the FIIs after the norms for debt investment have been relaxed. FIIs can now avail the debt limits in the corporate debt (long-term infrastructure category) without obtaining its approval till the overall FII investments reaches 90% of a prescribed cap of $12 billion (Rs. 53,806 crore).
As per the SEBI data, an investment limit of about Rs. 26,000 crore was available in this category as on October 31, 2012. There are two categories of government debt bonds with $10 billion of FII investment cap in each of them, while different categories of corporate debt securities face investment limits ranging from $1 billion to $20 billion.
FII investment in Indian debt market hit its 8-month high level of Rs. 7,852 last month according to SEBI. Also, the FIIs have invested more than Rs. 1,00,000 crore in the first 9-months of 2012 as avenues of return on investment were under pressure in the developed markets