Corporate debt market to get more depth

09 December 2008

While the equity markets in India have reached some maturity, it is the corporate debt market, which has been lagging being. The regulator, Sebi is about to change this with bringing in several proactive measures.

Firstly, Sebi plan to regulate exchange trades bonds, it also has created the framework for a new hybrid product, whereby the corporate sector can raise debt at a lower cost by way of domestic convertible bonds. Also by January 2009, Sebi will allow interest rate futures to be traded.

There is also a possibility of a separate exchange for derivatives. According to ASSOCHAM estimates, if derivative trading in India is estimated at Rs10,000 crore each day, their volumes could scale a rise of more than 100 times provided an effective exchange is put in place for derivatives.

All these three moves are aimed at ushering in a new era in India's corporate debt market.

Exchange traded bonds
India has been trying to introduce exchange-traded bonds for three years to enable companies to raise long-term funds for big projects.

India needs $500 billion investment in infrastructure sector in the five year period ending March 2012.