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All spice, no substance

Investor access, for the first time, to a basket of Indian public-sector bonds through an ETF listed in London has elicited sceptical groans, not because it poses liquidity risks or that corporate governance and transparency of the underlying securities barely conform to international best practice.

Instead, journalists are focusing on its moniker of “curry bonds”. If un-PC comedian Bernard Manning were to come back from the dead, perhaps he would feel more comfortable as a fixed-income trader.


Sir John Peace,
Standard Chartered

While South Korea offers ‘kimchi’ bonds, Turkey ‘baklava’, Japan ‘samurai’, and even Australia ‘kangaroo bonds’, this particular name is drawing criticism for its lazy stereotyping of Indian identity. It’s akin to referring to the US treasury note as a ‘hamburger’, or Irish ‘potato’ paper, or a French ‘garlic’ bond. Incidentally, the Indian ‘curry’ ETF references Indian Railways, which until 2013, 65 years after India’s independence, remained on the UK’s statute books, a somewhat belated change-of-control put.

Still, India may be getting off lightly compared with Armenia’s dollar-denominated paper, which traders dub the ‘Kardashian bond’, thanks to Tim Ash, who coined the term in 2013 when he was an economist at Standard Bank.

Further underscoring deference to the West among emerging market issuers, at November’s Boao Forum for Asia-Europe Cooperation in London, state broadcasters and officials from China poured compliments on the City and the UK Treasury for facilitating the country’s experiment with cross-border securities flows.

Delighted by the praise for the UK’s relationship with China, Sir John Peace, Standard Chartered chairman, waxed lyrical about Western lenders aiding Beijing’s macro-economic transition.

But when a senior Chinese broker asked why his bank had yet to establish a material onshore investment-banking presence, unlike HSBC, for example, Peace responded by merely restating the benefits to China of capital-account liberalization. Astonished by Peace’s unabashed refusal to even register the enquiry, one panel member said “not sure if your question was answered” to deaf ears.

It’s difficult to imagine a senior banker having the temerity to dodge a question so brazenly – banking on old-school deference – if the questioner were Western.

Anglo-Saxons might want to enjoy their cultural upper hand while it lasts. 

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