India's Bond market is both growing and contracting at the same time. Here's the how and why: (1/n) #bonds #Debt #Banking #StateofIndia
In value terms, bond market (outstanding value of corporate bonds), has grown at around 8.5% YoY in the first half of FY20. That is a slowdown from ~12% growth in FY19, but it is still growth. And overall credit growth in the economy itself has slowed. (2/n) #bonds #StateofIndia 
In volume terms though the bond market (outstanding issues of corporate bonds) has been declining for 7 consecutive quarters. The number of outstanding issues are down almost 10% from the peak in September-2017! (3/n) #bonds #Debt #Banking #StateofIndia
This is despite the regulation for large companies to borrow 25% of their incremental borrowings from the bond market kicking in from 1st April of this year (4/n) #bonds #Debt #Banking #StateofIndia
And more importantly, this is despite the fact that we are in a monetary easing cycle currently. Bond market tends to be buoyant during monetary easing phase since both demand and supply of liquidity tend to see disintermediation (5/n) #bonds #Banking #StateofIndia
A large part of this of course simply reflects the fact that NBFCs are facing stress and they were large issuers in the bond market. But this highlights how shallow the bond market in India is. (6/n) #bonds #Debt #Banking #StateofIndia
But what this has done is that, at least temporarily, this has paused the trend since 2012 where the bond market was growing faster than bank loans. The trend towards 'disintermediation of credit' has at least temporarily paused. (7/n) #bonds #Debt #Banking #StateofIndia
But there is a silver lining to this. While the growth in the bond market is stuttering, securitisation market has taken off. Outstanding securitised debt is growing over 25% and has almost doubled in last 3 years... (8/n) #bonds #Debt #Banking #StateofIndia
NBFCs need to raise money. They are finding it difficult through the bond market. So they are having to look at monetising (liquidating) their loan books... (n/n) #bonds #Debt #Banking #StateofIndia
