Life Insurance Corporation of India (LIC) has bought debt worth about Rs 4,300 crore in state bond auctions conducted by the Reserve Bank of India (RBI), starting the fiscal with its first big-ticket investment after clocking nearly 10 per cent growth in premium collection last year.
The country’s biggest insurer bought about four-fifths of the total notified amount in the auction conducted recently. State development loans (SDL) are the bonds issued by different state governments and sold through a process of RBI auction.
“We find SDLs the best and safe option to lock in long-term money. They are offering very attractive yields compared to other instruments at the beginning of the financial year,” an LIC executive told newspersons confirming the matter on the condition of anonymity
Seven state governments, including those of Himachal Pradesh, Kerala, Nagaland, Punjab, Rajasthan, Tamil Nadu and Uttar Pradesh, offered to sell Rs 5,385 crore worth of bonds through the auction.
“These rates are very attractive for long-term investors,” said N. S. Venkatesh, head-treasury, IDBI Bank. “Yields would remain elevated going forward unless there is a sudden change in interest rate cycle.”
