Pandemic Exposes Hurdles to Developing India’s Credit Market
- Publicly sold corporate bonds were under 1% of 2020 issuance
- From 2021, buyers can make online bids for new public deals
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Efforts by Indian policy makers to open up rupee corporate bond sales to more investors took a step backward during the pandemic, as borrowers shunned tighter regulations in the public market in a record dash for funds.
Private bond placements, which restrict the number of investors in a deal, have long accounted for the vast majority of debt sales in India’s local-currency credit market, but they rose to 99% of all offerings this year, the most in at least a decade. A bigger public debt market should help reduce borrowing costs for issuers by increasing competition for deals, and boost liquidity by drawing in more participants to transactions.