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-fold in a decade to Rs 40 lakh crore, an RBI official said.
Addressing a Bombay Chamber of Commerce & Industry event on Wednesday, Reserve Bank deputy governor Rabi Sankar said the concerted efforts by regulators and government have seen corporate bond outstanding has crossed Rs 40 lakh crore as of March 2022 from Rs 10.4 lakh crore in March 2012, while annual issuances rose to Rs 6 lakh crore from under Rs 4 lakh crore during this period. During the same period, the secondary market volume spiked from Rs 4.4 lakh crore to Rs 14 lakh
Only the US has a very liquid secondary corporate bond market and India has the second best, which is very low, though the turnover ratio is 69 here.
The US market is very deep because it is led by corporates and municipalities, which is a very small in the country. But corporate bond market as percentage of GDP is also the highest at 120 in the US, while in India, it is only 18 per cent as against 80 per cent in Korea and 36 per cent in China, Sankar said.