Fallen Angels - This is a bond that was once investment grade but has since been reduced to junk bond status because of the issuing company's poor credit quality.

Rising Stars - The opposite of a fallen angel, this is a bond whose rating has been increased because of the issuing company's improving credit quality. A rising star may still be a junk bond but on its way to being investment quality.

Debt Market in India

A primary requisite for a junk bond market in any country is a developed corporate bond market. But at present, India still lacks a developed primary and secondary corporate bond market.

The debt markets in advanced countries are significantly larger and deeper than equity markets. But in India, the trend is just the opposite. The development of debt market in India has not been as remarkable as in the equity market. However, it has undergone considerable changes in the last few years. Characterized by regulated interest rates, limited players and lack of trading earlier, the markets have become more integrated and less regulated. The debt market in India can be divided into two categories - Government securities market consisting of Central Government and State Government securities; and Bond market consisting of FI bonds, PSU bonds and corporate bonds / debentures. The government securities segment is the most dominant category in the debt market.

Next

* Contributed by -
H. Sandeep Reddy & Puneet Jain,
Indian Institute of Management Kozhikode,
Kozhikode, Kerala.