REITs Remove $ 1.63 Billion In Debt In 2021

By Manish M Suvarna

Foreign portfolio investors (REITs) withdrew almost $ 1.63 billion in debt instruments in calendar year 2021, which is significantly lower than in 2020. The majority of the money was withdrawn in December.

REITs withdrew $ 1.63 billion in 2021, up from $ 13.9 billion in 2020. As of December 2021, REITs took on $ 1.7 billion in debt, data showed.
According to market participants, most foreign investors withdrew their money from emerging markets after the outbreak of the pandemic in early 2020, forcing most central banks to drain the liquidity system and cut rates for support the economy, in particular growth.

Foreign investors remained uncertain and, as a result, calendar year 2020 saw significant deleveraging. But conditions began to improve after the acceleration of the vaccination campaign by various countries. This boosted the sentiments of foreign investors, but falling rates in their countries forced them to look to an emerging market where yields are better.

Investments by foreign players remained volatile in 2021. While these investors were net buyers of Indian debt for a few months, things worsened thereafter due to the resurgence of the coronavirus pandemic, the rise in l world inflation and other contributing factors.

In December, after the US Federal Reserve signaled an earlier-than-expected slowdown and rate hikes, flows were hit. “As the US Federal Reserve is aiming for a faster withdrawal from the monetary accommodation, there could be exits from emerging markets. However, we may not see a significant exit of REITs from Indian debt markets, as much of the hot money has already been released in the past four years. Currently, REITs own very few Indian bonds, ”said Pankaj Pathak, fund manager, fixed income at Quantum Asset Management.

Bond traders expect investment by foreign investors to improve in 2022, as there is a high likelihood that Indian debt will be included in the global bond index, which will attract substantial inflows of REITs from investors. Global ETFs and other benchmark investors.

“The flows of REITs in 2022 as such are expected to be very healthy. We see that most of the work for India to be included in the global indices is almost done and the last hurdle will be lifted after the budget as well. This will naturally lead to a significant flow to India, ”said Ajay Manglunia, Managing Director and Head of Institutional Fixed Income at JM Financial.