Bonds and the Bond Market in India
The Corporate Bond Market
India's corporate bond market is much smaller than its government bond market, and dominated by top-rated borrowers.
Companies still lean on banks.
Size
The corporate bond market is around a sixth of GDP, smaller than in many peers.
Ratings
Agencies like CRISIL, ICRA and CARE rate issuers from AAA down.
Placement
Most issues are private placements to institutions.
Reforms
Regulators encourage liquidity, retail participation and bond market depth.
A AAA issuer
A highly rated firm raises money cheaply, while a lower-rated firm pays more.
Ignoring credit ratings
They signal default risk.
Key takeaways
- The market is small.
- Ratings guide pricing.
- Private placements dominate.
- Reforms seek depth.
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