Retail Investor Exposed to High-Risk Corporate Bonds Originating in Surat
1 report, 1 independent
Updated Mon 00:00
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What happened
A saver in Pune purchased a debenture from a finance company that was unknown to the buyer. The debenture was rated BBB and offered a 13.5% return, with a minimum investment of ₹10,000. The buyer was unaware of the company's loan book or its capacity to refinance its borrowings.
From livemint.com
Why it matters
The market structure shows that only 3% of bonds are AAA-rated, while nearly 66% are rated A+ or below. This creates a credit inversion where sophisticated investors have largely declined to lend into this risk band, leaving the higher risk to retail savers.
From livemint.com