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Debt Issuance Cost and Interest Rate Risk

For the past few years, the interest rate in India has been falling, in such a scenario corporations tend to borrow for shortest possible period and thus restoring to repeated issue costs and interest rate risks. High regulatory and compliance costs also add to cost of resources.

Incomplete Access to Information

One of the most significant factors affecting the development of the bond market in India is the lack of sufficient, timely and reliable information on bonds and bond markets to the investors. Information on bond issue, size, coupon, latest credit rating, trade statistics are rarely available.

Recommendations for the Development of Indian Corporate Debt Market

Bond Manager

'Bond Manager' concept can be introduced in India as it is there in many developed bond markets. This group of intermediary should be committed and sufficiently capitalized. All the public / private issues will be placed through the bond manager.

For introducing the concept, work has to be done in the following areas:

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* Contributed by: -
Jayanta Das & Kartavya Soni,
ICFAI Business School, Hyderabad.