CARE Ratings :Study on Bond Markets

Please fund attached a study on bond markets in Asia by CARE. In this study we compared Indian corporate and government bond markets with those in other Asian countries based on ADB data. Some interesting observations are:
  1. GSecs dominate everywhere and therefore India is not an exception. The share of corporate bonds in total bonds outstanding is comparable though relative to GDP can be improved.
  2. In terms of turnover in secondary market, Indian markets have better multiples though again it is the GSec market which leads. But the turnover ratios is still higher in corporate debt than Japan.
  3. In other countries equities dominate after banks in terms of sources of finance for industry. Corporate debt is low down in the order, and India does relatively better than the others with a share of 18%, which is the highest for the set of 8 countries on which information is available.
  4. FIIs have a low share in GSecs in India, while this is not the case on other countries. Clearly there is scope to increase this level.
  5. Holders of government paper are well distributed but banks and contractual savings dominate.
While the comparison is selective and restricted to Asia, it is still indicative of the general corporate bond markets to play a secondary role to GSecs in general.
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