Indian Credit Market Overview

Underdeveloped Credit Market

• High interest rates – The prime lending rate in India is 14.25%. The current YTM for India's 10 year benchmark bond is 8.5%.
• High credit spreads – The Indian credit market is structurally biased towards A A A and A A corporate bonds, which account for 80% of the market. As a result, high-yield lenders command high credit spreads and face limited risk of refinancing.
• Gradual deregulation – India's banks and equity markets will not be able to satisfy all of the funds required for the nation's massive infrastructure build out. As a result, the government will continue to raise the corporate debt ceiling and relax restrictions on accessing credit by foreign investors.
• Secured against collateral – In contrast to the debt markets in developed countries, the high-yield market in India is fully secured. The amount of collateral received against debt is at least 2X for all our portfolio companies.