Similarly, institutional investors, such as, insurance companies, provident funds, pension funds, etc. would prefer to buy long term bonds, zero coupon bonds and inflation indexed bonds (IIBs) for their liability management. Floating rate instruments carry interest rate risks on re-fixing.
In India, although we have been raising funds by issuing variety of instruments, such as, fixed rate conventional bonds, FRBs, Zero Coupon Bonds, CIBs, the contribution of linkers (FRBs, IIBs, etc.) has remained small, thereby limiting interest rate risk in the debt portfolio.