Indian regulator hints at reforms to deepen bond market

0 Comment(s)Print E-mail Xinhua, September 17, 2021
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MUMBAI, Sept. 17 (Xinhua) -- India's capital market regulator the Securities and Exchange Board of India (SEBI) has hinted at several reforms in the pipeline to deepen the bond market.

Addressing a conclave organized by industry body Confederation of Indian Industry on Thursday, SEBI chairman Ajay Tyagi said "there is an increased urgency for this now considering the infrastructure development ambitions in the country... We need more public issuances, issuances of relatively lower rated bonds, and increased depth in secondary market with many more players."

Around 97 to 98 percent of the corporate bonds raised are through the private placement route and around 90 percent of the issuances are of AA and above ratings, he said.

According to industry experts, the Indian bond market is estimated at 2 trillion U.S. dollars.

With the market currently skewed significantly towards higher rated bonds, having a credit enhancement mechanism to enable lower rated issuers to access the bond market becomes critical, Tyagi said.

Another important need is the development of a credible Credit Default Swaps market to facilitate transfer and management of credit risk in an effective manner, he said.

The idea behind this suggestion is to have increased investor participation in the bond market, including individual investors; convenience to investors in acquiring and holding bonds similar to any other security; and improving transparency and price discovery in secondary market, he said.

The recent surge in individual investors' participation in equity markets offers an opportunity to harness their investment potential in bond markets, Tyagi said. Enditem

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