Yearlong Debt Crisis Blocks Plans for Bigger India Bond Market

India’s plans to expand its corporate bond market are running up against a yearlong credit crisis, in another obstacle for Prime Minister Narendra Modi’s efforts to jumpstart a sputtering economy, Bloomberg News reported. Sales of rupee bonds rated below AAA have halved so far this year to 691 billion rupees ($9.6 billion) as a wave of debt defaults and a funding crunch in the shadow banking sector make investors reluctant to buy riskier notes. Banks, who are major players in the primary market, are now mostly interested in providing backing for sales of quasi-sovereign and top-rated issuers, Bloomberg-compiled data show. Opening up India’s corporate bond market to more issuers and investors is an important part of Modi’s pledge to develop a $5 trillion economy by 2024, from $2.7 trillion now, as it will give companies more opportunities to raise funds to spend. Read more

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