NEW DELHI:
Sebi Chairman
Ajay Tyagi on Wednesday said there was a need to unify India’s bond market. “Robust price discovery in the corporate
bond market remains a challenge, even internationally, as they are not as standardized as shares,” he said at a Mumbai event.
Tyagi said all means of corporate financing, including
corporate bonds, need to fire from all cylinders, if the economy were to move to the next level.
He said investor base in corporate bonds is narrow and there was a lack of reliable benchmark across maturities. “Mechanisms such as on-tap issuance is not available, and there is total lack of liquidity in instruments, such as CDS,” he said.
Earlier this year, Sebi withdrew the 20 per cent cap for foreign portfolio investors (FPIs) seeking to invest in the bonds of a corporate entity.
Domestic mutual funds remain one of the key players in India’s corporate bond market, but they have become cagey ever since the IL&FS episode, making the market narrower. Holdings of mutual funds in corporate bonds in value terms stood at Rs 5.80 lakh crore at the end of June. The highest-ever holding of mutual funds in corporate bonds was in September 2017 at Rs 6.61 lakh crore.