Linkages between debt and equity markets

As debt markets evolve, equity investors will need to spend some time understanding the debt markets' perspective on companies

Till recently, most equity market investors hardly paid any attention to local debt markets. Indian debt markets were quite undeveloped, with limited issuance and trading beyond government securities. Most corporate borrowings were either through banks or raised overseas. Retail participation in corporate bond issues was almost non-existent. 

All the above has gradually changed over the last five to seven years. With the increasing financialisation of savings, flows into debt, both directly and indirectly through mutual funds and insurance companies, have skyrocketed. With the gradual liberalisation of foreign investment limits, even Foreign Portfolio Investments (FPIs) have become significant players in our