ICICI Prudential AMC's Strategic Shift in Debt Markets: From Sovereign Bonds to Corporate Debt
ICICI Prudential AMC Adjusts Bond Strategy
India's entry into a global bond index is attracting significant interest toward its sovereign debt. In a bold move, ICICI Prudential Asset Management Co. is reducing its allocation to sovereign bonds in favor of investment-grade corporate bonds. Manish Banthia, the Chief Investment Officer for fixed income, emphasizes the appeal of corporate debt due to low risks associated with deleveraged corporates.
Market Dynamics and Corporate Debt Appeal
Banthia noted, “Given that many corporates have deleveraged, the risk in non-financial corporate bonds is quite low, making this segment appealing from a risk-return perspective.” Simultaneously, the sovereign bond markets appear overvalued, leading to limited medium-term returns. Consequently, the ICICI Prudential All Seasons Bond Fund adjusted its allocation, cutting sovereign bond holdings from 61.1% to 55.6%, while increasing corporate debt from 28.9% to 33.5%.
- Demand for Indian corporate debt is rising.
- Investors are favoring debt markets over bank loans.
- Global inflows into Asian bonds are increasing significantly, with $13 billion entering Indian debt.
The landscape is changing as the Federal Reserve signals potential rate cuts, attracting foreign investment and altering the bond market dynamics.
This article was prepared using information from open sources in accordance with the principles of Ethical Policy. The editorial team is not responsible for absolute accuracy, as it relies on data from the sources referenced.