Corporate debt trading up 12 per cent in April-August 2016

Trading in corporate debt at top stock exchanges jumped nearly 12 per cent to about Rs 4.79 lakh crore during the first five months of the current financial year — the highest level for the period in two years.

Dealings worth Rs 4.28 lakh crore in corporate bonds were reported on the top two bourses NSE and BSE during April-August 2015, latest data by capital market regulator Sebi shows.

The figure stood at nearly Rs 5 lakh crore in the first five months of 2013-14, while it was Rs 3.90 lakh crore in the corresponding period of 2014-15.

During April-August period this year, National Stock Exchange (NSE) represented the largest share of trading in corporate bonds (about 82 per cent). Bonds worth Rs 3.93 lakh crore were traded on the exchange in the period, compared to Rs 86,303.96 crore on the BSE.

No trades were recorded under FIMMDA, an association of scheduled commercial banks, public financial institutions, primary dealers and insurance companies, for the period.

Month-wise, corporate debt trading has been consistently increasing since April, with August witnessing a trading value of Rs 1.09 lakh crore.

The trading value increased from Rs 81,520.85 crore in April this year to Rs 82,560.12 crore in May.

It further rose to Rs 96,948.64 crore in June and Rs 1.08 lakh crore in July.

Corporate bonds, also referred to as debt securities, are issued by private and public firms to raise money for various purposes like building a new plant, purchasing equipment or business growth.

Last month, an expert panel, comprising nominees from Reserve Bank, Finance Ministry and Sebi, had suggested easing of norms for foreign investors, a corporate bond index on the lines of Sensex or Nifty, and making it mandatory for large corporates to tap this market for funds beyond a threshold.

The panel also wanted tightening of norms for credit rating agencies by mandating them to strictly adhere to timely public disclosure of defaults.