New Delhi : Reserve Bank’s guidelines on corporate bond issuance will enhance liquidity and are credit positive, Moody’s Investors Service said on Friday. Further, the new guidelines permitting banks to issue Basel-III compliant additional tier 1 (core capital) and tier II (mainly debt) securities by way of rupee-denominated bonds overseas are credit positive because they will help create an alternative funding source for the banks’ capital needs, it said. “We expect that only well-rated and well-managed banks will be able to tap the international market for such issuance,” Moody’s said.
To deepen the corporate bond market, RBI on Thursday announced a slew of changes in fixed income and currency markets such as allowing lenders to issue ‘masala bonds’ and will accept corporate bonds under the liquidity adjustment facility (LAF).
“The RBI’s new guidelines on corporate bond issuance will enhance liquidity in the bond market, a credit positive,” Moody’s said.
At present, the corporate bond market accounts for around 31 per cent of total credit to the corporate sector in India.
