Indian bond investors scouring for bigger returns are snapping up securities tied to the nation’s equities.
Faced with bank deposit rates at multi-decade lows and a rally that has sent shares to records, investors may buy Rs100 billion ($1.6 billion) of market-linked debentures in the year to March 2018, the most in at least five years, according to Credit Analysis and Research Ltd.
Sales of equity-linked debt securities have surged in the past year as banks slashed interest rates on deposits after being flooded with funds due to Prime Minister Narendra Modi’s cash clampdown. State Bank of India cut the one-year bulk deposit rate by 175 basis points to 4.25% two weeks after the 8 November currency ban.
