Why Funds Managers Love Indian Bonds

Rupee sovereign bonds, Asia’s best performers for two years in a row, are still the top pick for some global funds.

Plunging oil prices, a stable currency and limited exposure to China are keeping investors bullish, with Pacific Investment Management Co. calling Indian notes the “preferred” local-currency securities in the region. The yield on benchmark 10-year debt in Asia’s third-largest economy will drop for a third straight year, the longest stretch since 2003, a Bloomberg survey of 10 fixed-income dealers and fund managers shows.

“We are overweight Indian bonds,” said Luke Spajic, Singapore-based portfolio manager for emerging markets at Pimco, which oversees $1.5 trillion in assets globally. “They offer high carry and the Indian economy has shown resilience in the face of global growth slowing. If we see dislocation and weakness, unrelated to local influences, we will most likely look to add.” Read More…