"The HDFC masala bond yields in the secondary market have shrunk because of limited supply as demand for the paper is rising among investors," said Shashikant Rathi, head-treasury, Axis Bank . With limited supply of securities in the market , investors' demand for the paper goes up, creating scarcity premium. "But most of the existing investors are long-only, and not selling in the secondary market. "HDFC started selling masala bonds, which were struggling to make an impression for over a year.India's largest mortgage lender garnered an order book of Rs 2000 crore, more than four times its actual size, excluding an oversubscription of another Rs 1,000 crore. There were as many as 48 investors who bid for the securities, but 40 of them got the final allotment.

Source: Economic Times August 02, 2016 14:24 UTC