Update on Indian Bonds | Capital Group

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Investment Insights

October 2013

Update on Indian Bonds

Bond Market in India Poses a Challenge to International Investors.

Regulatory hurdles and a complex registration process make it difficult for investors outside the country to purchase Indian government bonds. As market regulators seek to liberalize the process, Capital Group’s investment professionals have several options available to access the market both directly and indirectly.

With bond yields near historic lows in many developed countries, investors are increasingly searching for opportunities in emerging markets debt. India, for one, is viewed as a rapidly evolving market offering attractive yields in both dollar-denominated and local-currency debt, particularly following a re-pricing of the asset class in recent months. However, for investors located outside India, gaining direct access to local bond markets is challenging and involves a complex government registration process. India, similar to China, remains a difficult place to invest because of high regulatory hurdles, but regulators are pursuing changes in an effort to attract additional foreign investment.

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