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Informist, Friday, Aug 9, 2024

 

--IFSCA ED: Over $12 bln raised at GIFT-IFSC via sustainable bonds 

--CONTEXT: IFSCA ED Ramakrishnan at ASSOCHAM corporate bond summit 

--SEBI Rao: Online bond platform providers must retain investor trust 

--SEBI ED Rao: Urge domestic investors to invest in REITs, InvITs 

--SEBI ED Rao: AMC repo clearing volume touched 180 bln rupees/month 

--SEBI ED Rao: Continuously working on steps to develop corp bond 

--CONTEXT: SEBI ED Pramod Rao speaks at ASSOCHAM corp bond summit 

--SEBI ED Rao: Want to encourage issuance of municipal bonds 

--RBI Bhandia: Want complementary mkts to corp bonds to develop more 

--RBI official Bhandia: Larger corp bond mkt adds to fincl stability 

--CONTEXT: RBI official Dimple Bhandia at ASSOCHAM corp bond summit 

--RBI Bhandia: New bank investment norms to push up corp bond demand 

--CONTEXT: LIC MD Doraiswamy's comments at ASSOCHAM corp bond summit 

--LIC MD Doraiswamy:Keen to up corp bond invest for infra development 

--LIC MD Doraiswamy: Looking at investing in REITs, InVITs 

--SBI MD Tewari: See local corp bond mkt getting bigger than loan mkt 

--CONTEXT: SBI MD Ashwini Tewari speaks at ASSOCHAM corp bond summit 

--SBI MD Tewari: Project financing more viable through bonds vs loans

 

MUMBAI – The domestic corporate bond market will eventually come of age and surpass the size of the loan book to corporates in the banking system, State Bank of India Managing Director Ashwini Kumar Tewari said today. 

 

Tewari said he would prefer the development of the corporate bond market over alternate products such as Infrastructure Investment Trusts and Real Estate Investment Trusts. He highlighted that such instruments had seen higher rates of default than other corporate investments. For him, the use of corporate bonds--even through longer durations--was more viable to fund infrastructure development over a project's 15-20 year maturity period, rather than a loan.

 

Tewari was speaking at the annual ASSOCHAM's National Summit and Awards for the Corporate Bond Market. Life Insurance Corp of India Managing Director R. Doraiswamy was of the opposite view. From an investing perspective, LIC was keen to invest in more InvITs and ReITs, as well corporate bonds, in its aim to finance developing India's infrastructure, Doraiswamy said.

 

Securities and Exchange Board of India Executive Director Pramod Rao urged domestic investors such as insurers and pension funds, with mandates of long-duration asset holdings, to invest in these instruments. At present, ReITs and InvITs are attracting a lot of offshore investors, Rao said.

 

Doraiswamy said the country's largest life insurer was also pushing investment into lower-rated issuers wherever possible in its mandate. For the development of the market, Reserve Bank of India Chief General Manager Dimple Bhandia said that the feedback received from banks was that investment guidelines implemented on Apr 1 would push up demand for corporate bonds. The new investment guidelines allow corporate bonds to be added to a bank's held-to-maturity portfolio.

 

It was a failure of the system so far that the corporate bond market had failed to find a place for issuers rated lower than "AA", the RBI official said. She stressed the need to develop complementary markets to bonds to draw in both investors and issuers, such as a more active repo market. SEBI's Rao noted that corporate bond repo transactions had topped 180 bln rupees in a couple of months, after the introduction of AMC Repo Clearing Ltd, a clearing house backed by the two regulators.

 

"From a regulatory perspective, a larger corporate bond market adds to the financial stability of the economy because it derisks banks' portfolios and distributes it to different sections of the market," Bhandia said.

 

One key way that the corporate bond market could expand was to increase issuance in line with environmental, social and governance principles. The SBI MD, RBI official and Pradeep Ramakrishnan, the representative from the International Financial Services Centre Authority, all pointed to bond issuances for sustainable purposes. Ramakrishnan, executive director at the authority, said that over one-fifth of the $60 bln worth of debt raised in the Gujarat International Financial Tec-City over the past two years was through sustainable bonds.

 

Rao said that SEBI was continuously working on steps to develop the corporate bond market, while also encouraging increasing issuance of bonds from municipal bodies. With the rise of electronic bond platforms, both of these markets could see increased retail investment. At the same time, the regulator warned online bond platform providers that it must provide users with accurate information about the bond issuances on their platforms, and retain investors' trust.  End

 

Reported by Aaryan Khanna

Edited by Aditya Sakorkar

 

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