Indian Corporate Bonds Market – An Analytical Prospective

The Indian corporate bond market is still developing, and as such there are some peculiarities that might not be found in a matured market. This paper describes the state of development and key obstacles to further development. It reveals some unusual market behavior and patterns from available statistics. In particular primary and secondary market activity clusters around a small number of issuers and issues, with some resulting distortions. Some of the unusual patterns can be explained by market factors, and others remain puzzling. Despite a few unusual artifacts, statistical analysis verifies that the Indian corporate bond market largely maintains expected pricing relationships with ratings, maturity, optionality and industry type. Similarly the structure of probability of default of the corporate bonds and the behavior of credit spreads follow reasonable patterns