Debt market sees issuances worth Rs 1.89 lakh crore in April-September: Report

Reflecting robust activity, debt issuances picked up by 15.3 per cent to Rs 1.89 lakh crore during the first six months of the current fiscal over the same period a year ago, says a report.

Debt issuances worth Rs 1.64 lakh crore were made in the April-September period in 2014-15, according to Care Ratings. "The signals from financial market are not yet strong enough to indicate a major turnaround," Care said.

Noting that banks have been slow on lending to the manufacturing and services sectors with demand also being subdued, the rating agency said, "There has been some recourse sought to the debt market and CP (commercial paper) segment by companies, but it is not yet a generalised phenomenon".

As per the report, financial services segment continued to lead in the debt market with a share of above 72 per cent. The segment comprised debt issuances amounting to Rs 1.38 lakh crore, up 13.4 per cent from Rs 1.21 lakh crore for the period under review.

"Power sector continues to source funds from the debt market as well besides banks, while construction and real estate does access the market as banks do treat real estate as a sensitive sector and would be cautious while lending to this sector," the report said.

Debt issuances from manufacturing sector stood at Rs 10,084 crore for the first six months of 2015-16. Funds raised from debt by power segment stood at Rs 17,861 crore, while construction and real estate garnered Rs 10,346 crore, in April-September period of this fiscal.

Reflecting slow economic activity, growth in bank credit remained weak at Rs 61.60 lakh crore till August this year, representing a meagre 1.3 per cent increase over the same period year-ago, said the report.

Growth in credit to manufacturing as well as services has dropped, while agriculture and personal loans segments have registered positive growth rates, with the latter being higher than that in 2014.

"This is partly a reflection of overall slow economic activity as indicated by GDP growth for the first quarter as well as industrial growth so far," it added.