Comments
Waning investor confidence in the country’s troubled shadow lenders is sapping demand for corporate debt.
Companies sold ₹1.2-lakh crore ($17.3 billion) of bonds so far in the April-June period — down 57 per cent from the previous quarter and the weakest since the year-ago period, according to data complied by Bloomberg. That is as average yields on top-rated three-year corporate debt have dropped 23 basis points to 7.74 per cent during the period.
Liquidity risk in the nation’s credit markets roared back this month after non-bank financier Dewan Housing Finance Corporation (DHFL) delayed bond interest payments, a sign of stress in the sector that has persisted since IL&FS Group defaulted last year. The crisis has hit demand for cars to appliances, bulk of which were financed by shadow banks, and contributed to the slowdown in the economy.
“There’s a crisis of confidence among investors,” said Rajeev Radhakrishnan, head of fixed income at SBI Funds Management. “A prolonged period of liquidity crisis, which if unresolved, can potentially lead to solvency issues. And the impact won’t be isolated to specific entities given the inter-linkages.”
Comments
COMMENT NOW
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.