Growth of India's debt capital markets moderated: Report

Kolkata, Feb 15 : Driven by a slowdown in bond issuance, the growth of India's debt capital markets moderated by three per cent in the current year with a growth of 16 per cent in the value of corporate bonds outstanding by December end, a report said on Thursday.

"The growth of India's debt capital markets moderated in the current year with year-on-year growth of 16 per cent in the value of corporate bonds outstanding as on December 31, 2017 as against 19 per cent year-on-year growth as on December 31, 2016.

"The moderation has been driven by a slowdown in bond issuances during FY2018 (year to date), with 2 per cent year-on year de-growth in issuance volume during nine months 2017-18," Rating agency Icra said in its report. 

Agency's Group Head - Financial sector Ratings, Karthik Srinivasan said that the recent volatility as well as surge in long-term bond yields has impacted the growth in corporate bond issuances, however, India's corporate debt/GDP penetration remains low in relation to many other countries.

Thus, the medium to long-term prospects for growth of India's debt capital market remains intact, he said.

The volume of corporate bonds outstanding increased significantly to Rs 26.47 lakh crore by end of December 2017, as against Rs 8.89 lakh crore as on March 31, 2011.

However, the penetration of the debt capital markets as a proportion of GDP remains modest at 19.5 per cent in nine months of FY2017, the report said.

It is significantly lower than in other countries, like China (49 per cent) or other smaller economies like Brazil (38 per cent), Thailand (46 per cent), Malaysia (47 per cent) and Singapore (48 per cent), reflecting the scope for considerable improvement of issuer and investor participation in the debt markets, it said.