Enthused by growing interest of foreign investors in debt securities in the country, market regulator SEBI will conduct an auction this week for investment worth over Rs 10,000 crore by foreign investors.

The auction will be conducted on November 20 in both the government and corporate debt securities.

There are individual caps on investment by FIIs (Foreign Institutional Investors) in each category and SEBI conducts monthly auctions for the available limits within these caps.

At the last month’s auction, the FIIs had bid aggressively for both the government and corporate bonds. Incidentally, the FII investment in Indian debt market hit its eight-month high level of Rs 7,852 crore (about USD 1.5 billion) last month.

A higher amount of Rs 10,016 crore was invested by FIIs into the Indian debt market in February this year.

This month, SEBI is conducting auction for government and corporate debt security investments worth a total of Rs 10,616 crore or over USD 1.9 billion.

SEBI has relaxed norms for FIIs’ debt investment by allowing them to avail the debt limits in the corporate debt (long-term infrastructure category) without obtaining its approval till the overall FII investments reaches 90 per cent of a prescribed cap of USD 12 billion (Rs 53,806 crore).

After 90 per cent of this limit, FIIs would need to bid through an auction mechanism for allocation of remaining limits or about Rs 5,381 crore in this category.

As per SEBI data, an investment limit of about Rs 26,000 crore was available in this category as on October 31, 2012.

There are two categories of government debt bonds with USD 10 billion of FII investment cap in each of them, while different categories of corporate debt securities face investment limits ranging from USD one billion to USD 20 billion.

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