India’s ICICI Pru Life eyes curve steepening, running 7-yr avg duration, exec says
INDIA-FUNDS/ICICI PRUDENTIAL:FUNDVIEW-India's ICICI Pru Life eyes curve steepening, running 7-yr avg duration, exec says
By Dharamraj Dhutia
MUMBAI, Dec 5 (Reuters) - India's ICICI Prudential Life Insurance expects Indian government bond yield curve to steepen, and is running a weighted average duration of around seven years in its debt portfolio, a fund manager said.
"Within the sovereign portfolio, we prefer the liquid 10-year bond, 15-year bond and long bonds of 30-to-50-year maturity," said Vidya Iyer, Head - Fixed Income, ICICI Prudential Life Insurance Co.
"Long bonds tend to do well in the last quarter of the year as that is the period when long-term investors get decent flows into their funds"
Government securities account for about 65% of Iyer's debt portfolio, with the remaining 35% in corporate bonds of up to 5 years from a carry perspective.
The fund house manages debt assets worth 1.65 trillion rupees ($19.48 billion) as of end-October.
The insurer remains constructive on Indian bonds from a medium- to long-term perspective and expects the 10-year benchmark bond yield to ease to 6.50% by end of March, from 6.68% on Thursday.
POLICY EXPECTATIONS
On the Reserve Bank of India's monetary policy expectations, Iyer said weaker growth data has opened up room for rate cuts, but believes that the need of the hour is some sort of liquidity infusion more than the repo rate cut.
"We expect the RBI to cut Cash Reserve Ratio (CRR) by 50 basis points...Given the fact that we are still above the pre-pandemic levels of 4% on CRR, the case for a CRR cut becomes even stronger."
Easier liquidity conditions will bring down market interest rates even without a direct policy rate cut.
The RBI policy decision is due on Friday. Iyer, however, expects a 25-basis-point rate cut in February policy.
"Given that inflation is still well above the RBI's comfort level, we think the RBI will wait out for couple of more readings on inflation before embarking on the rate cut cycle."
($1 = 84.7230 Indian rupees) (Reporting by Dharamraj Dhutia; Editing by Janane Venkatraman)
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Business NewsNewsIndiaIndia’s ICICI Pru Life eyes curve steepening, running 7-yr avg duration, exec says
First Published:5 Dec 2024, 12:48 PM IST
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