Corp bond dues soar 4x to Rs 40.2 lakh crore in a decade

MUMBAI: Illiquidity in secondary corporate debt market is a global issue and so focus should be on further deepening primary market that has grown nearly four-folds in a decade to over Rs 40 lakh crore, an RBI official said.

RBI deputy governor T Rabi Sankar said concerted efforts by regulators and government have seen corporate bond outstanding touching Rs 40.2 lakh crore in FY22 from Rs 10.5 lakh crore in FY12. While annual issuances during this period have increased from Rs 3.8 lakh crore to close to Rs 6 lakh crore. He was addressing a Bombay Chamber of Commerce & Industry event here on Wednesday.

During this period, the secondary market volume spiked from Rs 4.5 lakh crore to Rs 14.4 lakh crore, showing clearly that secondary trading has not risen in consonance with the size of the market, he said. However, as of end June 2022, the outstanding volume slipped to Rs 39.6 lakh crore across 29,745 outstanding instruments. Sankar said the growing size of the corporate bond market and the number of issuances every year (5,400 in FY22) are important indicators of the success of development efforts of the government and regulators.

On the dominance of private placement of debt issues in the country, he said this is one of the main reasons for the low depth of the secondary market.

In FY12, of the total around Rs 4 lakh crore issuance, public issues constituted only around 2%. And the trend has not moved since then even though the total issuances have been rising which peaked at over Rs 8 lakh crore in FY21. For instance in FY22, money raised through public issuances was just Rs 11,589 crore, which is just about 2% and the rest Rs 5.9 lakh crore were private placements, he said. Stating that only the US has a very liquid secondary corporate bond market, he said India is the second best, which though is very low.

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