The door is slowly opening on India's debt markets. Foreign investors can now invest 100% of their Indian portfolios in corporate debt as against the 30% allowed previously. The market itself is booming. ... long-term debt worth Rs55 billion ($1.54 billion) raised by Indian corporates in the past few months and fixed-income returns overtaking those of equities, the market is ripe ... reform.
The driving force ... India's debt market reforms is the need to raise capital ... infrastructure projects. India needs ... about $300 billion ... the next 10 years for infrastructure alone. Only half of this can be raised from the commercial banks, the equity market, the government and multilateral agencies like the World Bank. The other half must come from its domestic debt markets. But the Indian debt market is too small to meet this requirement at the moment.
So the market is moving ... the right direction and bonds-not shares – are the hottest selling investments in India today. In the past, equity markets overshadowed debt markets ... both size and returns. While India's total stock market capitalization is still equal ... $138.6 billion, analysts say that investors are increasingly choosing bonds ... equity. Of the total Rs 16.74 billion raised from the capital markets in the month of August, 78% or Rs 13 billion was raised in debt floats. Returns ... debt are also higher than from equity.
In spite of the government's efforts, two major obstacles remain. The government bond market is still closed ... investment banks. The other problem is liquidity.
Besides, secondary market trading in debt is limited ... government securities and is done mainly on the wholesale debt market of the National Stock Exchange. Allowing market-making in government securities is the key ... creating an active secondary debt market in India.
Having this in mind the Reserve Bank of India – the Indian central bank-set ... a system of primary dealers or market makers in government securities. But for debt trading to be successful, several structural changes need to be put in place, including setting up a depository and establishing a REPO market.
Words you may need:
corporate debtоблигации, выпущенные корпорацией
The market... is booming.На рынке ... наблюдается повышение деловой активности.
fixed-income returnдоход по бумагам с фиксированным доходом
overtakev обгонять
ripeadj (зд.) готовый к чему-л.
overshadowv омрачать, затмевать
capitalizationn капитализация
debt floatвыпуск долговых обязательств
market-making«делание рынка»
primary dealerпервичный дилер
depositoryn депозитарий
REPO marketрынок РЕПО
Ex. 10. a) Open the brackets putting the verbs in the correct form,