US economy was on the rise and the securities markets had stable operational model

The decade of 1990s saw the dominance of acquisitions and LBOs (Leverage Buy Outs) in US market. Since banks were not keen on financing all such ventures due to inherent risks, corporates chose issuance of high-yield bonds

A surge in media, cable and communication companies along with deregulation in entertainment sector led to increase in number of small private players. These players preferred corporate debt financing to traditional finances in the form of loans from banks

Investors were willing to invest in high-yield bonds due to increased confidence in corporates since US economy was on the rise.

Hence, we can safely say that Indian markets are ready for Junk Bond Market. However, we would like to highlight some benefits and initial hurdles to this initiative in the form of SWOT Analysis (Strengths, Weaknesses, Opportunities, and Threats) of the market.

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* Contributed by -
Neha Agarwal & Padmakar Kulkarni,
PGDIM - XI,
NITIE, Mumbai.