| | October 20178CIOReviewor eternity, financial market participants have debated over the deepening of the Indian Corporate Bond Markets. The subject matter has not only been very close to my heart but at the core of my professional experience for the past 21 years. Finally, I am of the opinion that Indian bond markets are taking off!YTD 2016 has witnessed record volumes, over INR 400,000 crore, of bond issuances and adding public bond issues and state government securities under the UDAY scheme, the gross volume crosses INR 450,000 crore. This is a staggering number by any yardstick. Single issuance of over INR 5,000 crore and tenors of 15 years and longer have been successfully subscribed by investors. Wide-ranging issuers have accessed bond markets, though bulk of issuances would have been by AA or higher-rated issuers.Do note that the below discussion refers to the private placements (over 95 per cent of all issuances), both by number of issues, volume and bonds that are generically referred for non-convertible debentures.Indian bond markets are unique in many ways. Unlike bond markets of developed economies where underwriting is an extreme rarity, in India, a large proportion of bond deals are either underwritten or bought-out by underwriter-arranger. Despite this `evolution' of Indian bond market, it still needs to leapfrog in many other aspects. Reforms are warranted for- a thriving secondary market; widening access to issuers with ratings below the `AA' rating handle and non-investment grade issuers; in the regulations governing investors; rationalization of issuance stamp duty; credit risk hedging markets; enforcing common market standards ­ to list some areas.Bond markets provide an alternate source of financing to borrowers, some of the key advantages being-· Lower than loan funding rates with predomi-nance of fixed rate securities while loans on floating rate basis.·Coupon payment frequency can be structured ­ ranging from annual-pay to coupon payment IN MY OPINIONFCORPORATE BOND MARKETS FINALLY TAKING OFFBy Jayen Shah, Executive Vice President & Head - Debt Capital Markets, IDFC BANK Ltd
< Page 7 | Page 9 >