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Icra finds safe bonds going down
New Delhi, June 12: The trading of highest safety instruments had progressively gone down, pointed out the Insurance and Credit Regulatory Authority (Icra), while the inadequate safety wielding junk bonds surged during 1997-2001.
New Delhi, June 12: The trading of highest safety instruments had progressively gone down, pointed out the Insurance and Credit Regulatory Authority (Icra), while the inadequate safety wielding junk bonds surged during 1997-2001.
The rating agency had examined the month-wise frequency of trading of bonds of different categories among the 20 most frequently traded bonds and the share of bonds of different rating categories in the total frequency of trading.
Expressing concern over the "unsatisfactory" disclosure and documentation standards for privately placed and unlisted bonds, Icra said in a recent study that it was imperative for the country to have standardised practice to tackle the problems of information asymmetry, low liquidity and consequent distortions in corporate debt segment.
The share of highest safety 'AAA' rated bonds, which stood at 13 per cent of the total trading in 1997-98, fell to zero per cent by 2000-01, ICRA said in a recent study.
ICRA found that the share of high safety 'AA' rated bonds also fell to 15 per cent during 2000-01 from 22 per cent in 1997-98.
The share of bonds -- having inadequate safety rating of 'BB', risk prone rating of 'B', substantial risk prone 'C' and defaulted instrument 'D'-- were on the rise, it said.
The share of trading of such junk bonds rose alarmingly to 52 per cent in 2000-01 from 34 per cent in 1997-98. Bureau Report
Expressing concern over the "unsatisfactory" disclosure and documentation standards for privately placed and unlisted bonds, Icra said in a recent study that it was imperative for the country to have standardised practice to tackle the problems of information asymmetry, low liquidity and consequent distortions in corporate debt segment.
The share of highest safety 'AAA' rated bonds, which stood at 13 per cent of the total trading in 1997-98, fell to zero per cent by 2000-01, ICRA said in a recent study.
ICRA found that the share of high safety 'AA' rated bonds also fell to 15 per cent during 2000-01 from 22 per cent in 1997-98.
The share of bonds -- having inadequate safety rating of 'BB', risk prone rating of 'B', substantial risk prone 'C' and defaulted instrument 'D'-- were on the rise, it said.
The share of trading of such junk bonds rose alarmingly to 52 per cent in 2000-01 from 34 per cent in 1997-98. Bureau Report