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The new Companies Act could act as a dampener for fresh bond placements, especially for non-banking finance companies (NBFCs), according to credit rating agency ICRA.
NBFCs are the largest issuers in the bond market and heavily reliant on bonds as a source of funding.
The new rules related to the creation of a debenture redemption reserve account along with high borrowing costs may keep mobilisation through the bond markets low, at least in the near term, the agency said in a statement.
With benchmark interest rates not showing any signs of easing and corporate bond yields remaining high, the corporate debt market may remain subdued in FY15, according to credit rating agency ICRA.
This is in line with the 27 per cent decline in issuance in FY14 compared to FY13, according to ICRA estimates.
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