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INDIA: JP Morgan to Monitor Bond Liquidity Following FAR Curbs

INDIA
IndiaGlobalEM BulletBulletAPACEmerging Market NewsRegion
  • Following moves by authorities to limit foreign ownership of some new bonds, JP Morgan will more closely monitor liquidity in longer tenor Indian debt that is part of its emerging market bond index. According to Bloomberg, the lack of secondary market quotes or complaints from clients would prompt the Wall Street bank to reassess whether the notes should continue to be included in the index.
  • As a reminder, the RBI unexpectedly announced earlier in the week that overseas investors will no longer have full access to freshly issued Indian government bonds with 14-year and 30-year tenors under the freely accessible route (FAR), as authorities want demand to be concentrated in the front end to improve flexibility of the curve. An official said yesterday the FAR curbs are designed to prudentially manage USD inflows.
  • Separately, the Nifty and Sensex both sit over 1% lower today after weak Intel sales figures for Q2 and a sell-off in Japanese equities (Nikkei 225 closed over 5% lower) triggered a global rout across most major equity indices. Meanwhile, USD/INR remains close to record highs despite gains for the broader Asia FX basket post-Fed.
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  • Following moves by authorities to limit foreign ownership of some new bonds, JP Morgan will more closely monitor liquidity in longer tenor Indian debt that is part of its emerging market bond index. According to Bloomberg, the lack of secondary market quotes or complaints from clients would prompt the Wall Street bank to reassess whether the notes should continue to be included in the index.
  • As a reminder, the RBI unexpectedly announced earlier in the week that overseas investors will no longer have full access to freshly issued Indian government bonds with 14-year and 30-year tenors under the freely accessible route (FAR), as authorities want demand to be concentrated in the front end to improve flexibility of the curve. An official said yesterday the FAR curbs are designed to prudentially manage USD inflows.
  • Separately, the Nifty and Sensex both sit over 1% lower today after weak Intel sales figures for Q2 and a sell-off in Japanese equities (Nikkei 225 closed over 5% lower) triggered a global rout across most major equity indices. Meanwhile, USD/INR remains close to record highs despite gains for the broader Asia FX basket post-Fed.