Viral Acharya said the domestic corporate bond market had grown to $447 billion of outstanding stock as at the end of March 2019, an annualised growth rate of 13.5 per cent during the last four years. Telegraph file pictureThe insolvency and bankruptcy code (IBC) has paved the way for foreign investment in corporate bonds that have low rating, outgoing RBI deputy governor Viral Acharya said. India’s corporate bond market is characterised by a preference for only highly-rated papers, with a recovery rate of 25 per cent said to be one of the lowest in the world. However, a few instances of recent defaults in commercial paper and corporate bond markets have raised concerns about the quality of disclosures, even for investment-grade firms,” he said. It said the primary reason for the aversion to lower rated paper (below AA category) is the poor recovery in case of a default.

Source: The Telegraph June 30, 2019 22:07 UTC