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Reuters
23-06-2025
- Business
- Reuters
Indian insurers say limit on duration for state debt STRIPS may dent demand
MUMBAI, June 23 (Reuters) - The Indian central bank's attempt to create a market for separate trading of principal and interest for state government debt may be dampened by rules on the duration of bonds eligible for such securities, top insurers said. Earlier this month, the Reserve Bank of India enabled Separate Trading of Registered Interest and Principal of Securities (STRIPS) for state debt but said these securities can only be issued for bonds with a residual maturity of up to 14 years. With about half of state debt supply in longer-duration papers, the regulation could curb demand, mainly from insurance companies which are the biggest investors in STRIPS. "As far as life insurance companies are concerned, the demand is more for above 20-year papers. I expect the RBI to eventually remove the duration cap in state debt STRIPS and allow STRIPS even for 30-year papers," said Rahul Bhuskute, CIO at Bharti AXA Life Insurance. STRIPS allow dealers to sell principal and interest payments independently, enhancing liquidity in the state government securities by enabling distinct trading of these components. Until now, STRIPS were allowed only for central government securities, with no limit on duration. "Insurance companies have liabilities up to 40-plus years and hence preference is always towards STRIPS with longer maturities," said Sachin Bajaj, executive vice president and chief investment officer at Axis Max Life Insurance. Bajaj added that insurance companies primarily fulfill their 10-15-year demand through corporate bonds. Indian states raised 1.74 trillion rupees ($20.06 billion) through the sale of bonds in April-June, of which over 50% was borrowed through bonds with more than 14 years duration. Traders estimate another 8 trillion rupees of state bonds will be issued over the next three quarters with a similar maturity pattern. STRIPS help insurers increase the duration of their asset portfolio as well as improve cash flow matching against certain liabilities, said Ketan Parikh, head of fixed income at ICICI Prudential Life Insurance. "Typically, insurance companies have a larger appetite for STRIPS beyond 15 years, while pension funds are more active in the 8-15 year STRIP segment," Parikh added. ($1 = 86.7300 Indian rupees)


Bloomberg
05-06-2025
- Business
- Bloomberg
Edgar Lungu, Ex-Zambian Leader Who Riled Investors, Dies at 68
Edgar Lungu, a former Zambian president who clashed with investors in the key mining industry and oversaw a massive ramp-up in state debt, has died. He was 68. Lungu had been under medical supervision in recent weeks and died in a hospital in South Africa early Thursday, his daughter Tasila Lungu-Mwansa said in a video posted on social media.


Bloomberg
27-05-2025
- Business
- Bloomberg
Short-Term Muni Gains Shield Investors From Long-Bond Struggles
Muni investors seeking nearly instant gratification are being rewarded for their eagerness. State and local debt is often seen as a buy-and-hold investment, but in 2025 bonds maturing in under a year are performing the best of all muni segments, according to data compiled by Bloomberg. The municipal short-term index has jumped 1.3% — the biggest year-to-date gain since at least 2012 — while most other Bloomberg municipal indexes have posted losses.