bond yields: Individuals seeking yield in India snap up risky firms’ debt

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Individual traders in India are dashing to purchase company bonds from weaker debtors, taking greater dangers to spice up returns in a debt market dominated by institutional traders.

Company be aware gross sales to retail traders have greater than doubled from a 12 months earlier to 67.2 billion rupees ($898 million) up to now in 2021. An additional 31 billion rupees of bonds that people should purchase into are being marketed proper now, and one other 50 billion rupees of such debt is in the pipeline together with a deal from India Grid Trust introduced late final week.

Bloomberg

Many savers determined for yield are more likely to soar on the probability to purchase such notes. That’s as a result of they’re scuffling with persistent inflation strain at the same time as financial institution deposit charges have dropped to the bottom in greater than a decade.

Policy makers in India have lengthy sought to deepen the native company bond market, as one of many world’s worst unhealthy debt piles makes banks reluctant to lend and establishments keep away from all however the highest-rated notes. But public debt choices that people can participate in solely totaled 71 billion rupees final 12 months, equal to 0.8 per cent offered by personal placement to establishments.

The pickings for retail traders additionally are typically riskier: whereas about 66 per cent of local-currency notes privately positioned to skilled traders up to now in 2021 carry high rankings, solely one of many 9 points being marketed or in the pipeline has a AAA ranking.

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