India's states to compete for cash
MUMBAI: India's states are gearing up to sell up to $7.6 billion in debt to foreign investors for the first time, stepping up competition for funds that could force the country’s spendthrift provinces to clean up their books and tighten spending controls. India's states pay the second-highest government yields in Asian emerging markets after Indonesia: around 8.16 per cent for a 10-year bond, much higher than central government debt and nearly two and three times the yield on Philippines and Thai paper. That is expected to be a big draw for overseas funds, which have already poured nearly $8 billion into Indian central government debt so far this year, attracted to economic fundamentals that have been relatively better than emerging market peers. The arrival of foreigners could force a major change in the state government bond market, where yields vary little across the states despite different fiscal positions, and put governments under pressure to curb wasteful spending.