Domestic corporate debt market has registered impressive growth. In the five years between June 2014 and June 2019, the market size has grown from Rs 14.43 trillion to Rs 30.63 trillion, marking a jump of 112%, according to B.P Kanungo, Deputy Governor, Reserve Bank of India. Government securities, that constitute the largest segment of the fixed income market, stand at about Rs 58 trillion, treasury bills accounting for another about Rs 6 trillion, he noted in a latest speech. Though the primary issuances have been quite seamless, only the 10 year benchmark security accounts for bulk of the trading volumes. Indeed, liquidity in this bench mark security as represented by the bid-ask spread is impressive, and according to a recent BIS study, among the best amongst emerging markets. Liquidity, however, almost completely dries off in other off-benchmark securities, which does not reflect well on the market.
Out of this, the size of structured notes market has grown from Rs 8.78 billion to Rs 230 billion. These figures underscore the growing maturity of the market. However, there are in excess of 24000 instruments outstanding, reducing the average outstanding per instrument to a small figure. On the other hand, the issuances in recent times have been predominantly (upto 75%) by the financial firms. Besides, most of the issuances have been through private placement. The secondary market in corporate debt is so illiquid that we can very well say there is no such market.
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