The bond market witnessed a sharp 60 per cent decline in issuances in the first quarter (Q1) of FY22, with total issuances being at ₹87,885 crore as against ₹2,21,668 crore during the same period last year, according to CARE Ratings.
In 2020, the Reserve Bank of India (RBI) had announced a series of Long-Term Repo Operations (LTRO) and Targeted LTRO operations which helped the corporate bond market.
“This year, while there have been announcements made for special LTROs for small finance banks the response has been limited.” the agency said in a statement.
CARE Ratings observed that bank credit growth has been in the negative zone with de-growth of 1 per cent on top of -1.2 per cent last year.
On a sector-wise basis for the first quarter of the year, there was a fall in growth in credit by 1.7 per cent for industry and 1.1 per cent for services.
Growth in outstanding Commercial Papers was lower at 3.2 per cent this quarter against 13.6 per cent in 2020.
Meanwhile, CARE Ratings reported a 10 per cent increase in standalone net profit at ₹11 crore in the first quarter ended June 30, against ₹10 crore in the year ago quarter.
Standalone total income increased by 16.31 per cent from ₹42.49 crore in Q1 FY21 to ₹49.42 crore in Q1 FY22. Total expenses rose by 21.07 per cent from ₹30.09 crore to ₹36.43 crore.
“The first quarter of the year started with lockdowns being imposed by several states sequentially over the first two months which restricted consumption activity. This has been reflected in the lower PMI indices for manufacturing and services this quarter."
“Therefore, the overall environment in the credit and debt markets was subdued amid lockdown conditions which affected real sector activity. All this affected investment activity in the economy which had a bearing on the credit rating industry,” the agency said in a statement.