Foreigners sour on Indian bonds as index inclusion stalls

India’s 10-year bond yield rose to 6.95% earlier this month, the highest in nearly three years, after the government shocked the markets with its record borrowings.

FOREIGN money managers are turning bearish on Indian debt after policy makers skipped opportunities to implement reforms needed to enter global bond indices.

PineBridge Investments Europe Ltd and Lombard Odier now expect Indian bonds to decline after this month’s budget didn’t address tax changes needed for sovereign debt to be listed on the Euroclear platform.