IFR Asia - 13.10.2018

Please contact us if you have information about job moves: [email protected]

„ Jyoti Bisbey has

left the World Bank

to join the UNITED

NATIONS ECONOMIC AND

SOCIAL COMMISSION FOR

ASIA AND THE PACIFIC,

the development arm

of the UN in Asia.

Based in Bangkok,

she will focus on

infrastructure finance

and public-private

partnerships in

ESCAP’s finance for

development unit.

She was previously

with the World Bank

for over 18 years,

where she was most

recently focused on

PPPs in central Asia,

China and Mongolia.

„ The ASIAN

INFRASTRUCTURE

INVESTMENT BANK

has appointed Jose

Camacho, Credit

Suisse’s Singapore-

based vice chairman

for Asia Pacific, as

a member of its

international advisory

panel.

Camacho, who was

Secretary for the

Department of Energy

in the Philippines and

before that worked

at Deutsche Bank,

is one of three new

members appointed

to the panel.

The other two are

Myung-Ja Kim, a

former Minister of

Environment for

South Korea and Meg

Taylor, who previously

worked at the World

Bank.

RBI mulls relaxing rules for FPIs

4HEû2ESERVEû"ANKûOFû)NDIAûPLANSûTOûGIVEû
FOREIGNûINVESTORSûMOREûmEXIBILITYûTOûINVESTû
in the country’s debt capital markets in a
bid to attract long-term stable investment
mOWSûANDûARRESTûAûDECLINEûINûTHEûRUPEE
In a paper released earlier this
MONTH ûTHEû2")ûOUTLINEDûPLANSûFORûAûNEWû
investment channel for foreign portfolio
INVESTORS ûCALLEDûTHEûh6OLUNTARYû2ETENTIONû
2OUTEvû4HOSEûPARTICIPATINGûINûTHEûNEWû
scheme would need to commit to holding
their investments for at least three years.
Under current rules in India’s bond
market, investments of less than one year
are capped at 20% of foreign investors’
portfolios. Foreign investors also cannot
buy more than 50% of any single corporate
debt issue, while their overall exposure
to any issuer is capped at 20% of their
portfolio.
Most foreign investors reckon that the
622ûWILLûNOTûBEûENOUGHûTOûENTICEûTHEMû
to invest in local currency debt when the
existing quota is already underused.
h4HEû622ûWILLûBEûMOREûINûDEMANDûWHENû
CURRENTû&0)ûLIMITSûAREûUSEDûUP vûSAIDû,EONGû
,INû*ING ûINVESTMENTûMANAGERûINûTHEû!SIANû
lXEDûINCOMEûTEAMûATû!BERDEENû3TANDARDû
Investments.
According to data from India’s National
3ECURITIESû$EPOSITORY ûFOREIGNûPORTFOLIOû
INVESTORSûHAVEûCURRENTLYûUSEDûûOFûTHEû
amount available for corporate bonds.
3TILL ûSOMEû$#-ûBANKERSûSUGGESTûTHATû
THEû622ûMAYûHAVEûSOMEûUSEûFORûSPECIlCû
investors.
“For example, when a parent company
wants to invest 100% in an Indian
subsidiary and wants to use the debenture
ROUTE ûTHEYûMIGHTûlNDûTHEûCURRENTûCAPSû
constraining,” said Sandeep Bagla, associate

director at Trust Capital.

h4HEû622ûROUTEûWILLûALSOûBEûPREFERREDû

by the FPIs that want to invest in stressed

assets and the funding is happening

through some structured paper or debt

security.”

RBI PROPOSALS

Under the new proposals, the central bank

would decide on the total amount available

TOûFOREIGNûINVESTORSûTHROUGHûTHEû622ûBASEDû

on macro-prudential considerations and

overall demand. Foreign investors would be

allowed to invest in both government and

corporate bonds.

Foreign investors would apply for

622ûQUOTASûVIAûANûAUCTIONûPROCESSûANDû

COMMITûTOûINVESTINGûATûLEASTûûOFûTHEû

portfolio within one month. Investors will

be allowed to move their investments to

their regular portfolios, subject to general

investment limits.

They would only be able to exit their

investments before the three-year period is

up in exceptional circumstances and would

have to sell to foreign investors.

Investors would be allowed to buy repos

for liquidity management, provided the

amount borrowed did not exceed 10% of

their overall investments. They would also

be allowed to buy currency and interest

rate derivative instruments.

Several observers noted that foreign

investors would only be willing to invest in

RUPEEûBONDSûIFûTHEûRULESûAREûSIMPLIlED

h!NYûFORMûOFûSIMPLIlCATIONûORûREDUCTIONû

of rules would help in enticing foreign

investors to invest in local currency Indian

debt,” said Johnny Chen, portfolio manager

at NN Investment Partners.

NRI BONDS

One measure India is also reportedly

considering is issuing bonds for residents

living abroad.

h7EûEXPECTû2")ûTOûLAUNCHûNON

RESIDENTû

)NDIANûBONDSûRAISINGû53BNnBNvû

"ANKûOFû!MERICAû-ERRILLû,YNCHûSAIDûINûAû

note last Friday.

4HEû2")ûOPTEDûAGAINSTûRAISINGûINTERESTû

rates during its policy meeting on October

ûDESPITEûRISINGûINmATIONûWHICHûHASû

prompted speculation that it will consider

other measures to buttress the falling

rupee.

h4HEû2")SûSURPRISEûDECISIONûTOûLEAVEûRATESû

unchanged this month implied that the

POLICYûREMAINSûCENTREDûONûTHEIRûINmATION

stability mandate and is not targeted at

CURRENCYûMANAGEMENTvûSAIDû2ADHIKAû2AOû

ECONOMISTûATû$"3û"ANK

“A non-resident deposit/bonds scheme

is under consideration, though its success

in calming the markets hinges on an

improvement in the external environment,

AKINûTOûv

$URINGûTHEûTAPERûTANTRUMûINûû)NDIAû

opened a deposit scheme for non-resident

INVESTORSûTHATûBROUGHTû53BNûINTOûTHEû

country.

KRISHNA MERCHANT

“For example, when a parent

company wants to invest 100%

in an Indian subsidiary and

wants to use the debenture

route, they might find the

current caps constraining.”

Please send job moves to

[email protected]