Manager who bet on India mini-Lehman moment likes non-bank debt

DSP's company bond fund was the top performer among 17 rupee corporate note funds in the last six months, according to data compiled by Bloomberg

India’s top-performing local corporate bond fund is making another contrarian bet after its decision to buy notes during last year’s liquidity squeeze in the market paid off.

DSP Investment Managers’ corporate bond fund is adding to holdings of debt from non-banks even as the shock defaults by Infrastructure Leasing & Financial Services Ltd., sometimes called India’s mini-Lehman moment, still hang over the sector’s debt. Those notes offer higher yield premiums than publicly owned companies.

The Reserve Bank of India on Thursday cut interest rates for a second time this year in the face of headwinds to the economy at home and abroad.