IndiaBonds reposted this
The Indian Bond Market grows to US$2.69 trillion as of Sep-24. Interestingly the outstanding corporate bond market at US$598 billion is growing faster this financial year. (Source: SEBI, CCIL) Latest updates demonstrate the outstanding stock of bond market growing by US$100bn in the 6 months of FY2024-25 with corporate bond market alone being US$31bn of this! Important contributing factor of this growth remain the advent of SEBI-regulated Online Bond Platforms (OBPs) like IndiaBonds - where we are making access to corporate bonds accessible to individual investors across the country! Past 2 years have seen amazing support from regulatory regime to promote the growth of the bond markets. However, I still get asked what more is required to accelerate its growth. Hence penning down some thoughts here (views are personal) and probably elaborate on these and more topics in subsequent posts : 1) Disorganised Fixed Income Distribution - We have well functioning frameworks for distribution of equities by exchange registered APs (Authorised Persons), as well as for mutual funds by AMFI-registered ARN holders. Distribution of fixed income remains unorganised and hence dissemination of knowledge remains low. Furthermore, given the relative opaqueness of pricing in fixed income, the last mile delivery is done by 'Mark Ups' which ultimate investor does not know. Framework and transparency end-to-end will ensure customer trust. 2) Dichotomy of Venues and Disclosure - There exists 2 venues for corporate bond trading - Capital Markets (CM) segment and RFQ (Request for Quote) segment. Bonds are traded on CM segment by any stockbroker and are quoted on 'dirty price' - principal+accrued interest with no distinction. There is usually an exchange ticker code and no mention of exact issuer name, rating, coupon payment schedule etc. On the other hand RFQ (and all OBP platforms) represent fixed income with all information and descriptions which are highly informative. The 2 diverse venues on exchanges make fixed income highly confusing for individual investors given disparity in disclosure and trading nomenclature. Also if we were to make corporate bonds more liquid - then just ONE venue of trading/reporting for pooling all transactions will be more effective. Its all part of the journey. Ultimately if India were to grow to a US$7-8 trillion economy, the funding of this growth has to come from credit capital markets. The industry continues to expand through proactive reform, technology and education. Lots more to come! A Bond in Every Hand!