India's bad debt situation: given India has such a high bad debt percentage at 10.3% according to IMF's financial soundness indicator, should we still invest in India's corporate bonds?

Hi anon, beyond the currency risks that you are exposed to as explained by Leonard in another answer, bad debt issues show that the corporate governance and filtering system of India's banking loan system is questionable - If they are giving out debt without first doing a financial soundness check on the likelihood that such debt is going to be paid back, then how can you be sure that the corporate bonds themselves aren't the same? this has been an ongoing issue for a few years now - India's stressed asset dilemma has resulted in the creation of a entire host of debt restructuring companies in order to restructure bad debt.

The most recent fining and threat of imprisonment for Rcom's Anil Ambani for not paying back the debt to Ericsson in India just goes to show the audacity that certain corporations have to rules and regulations of debt issuance. Tread carefully in the India debt market, especially with regards to those which are restructured - the risk level is still high. Do research the companies that you intend in purchasing the corporate bonds of, and their Cash flow and debt/equity ratio. it is imperative that they are financial sound and able to comfortably pay off any particular debt they may have.

Hi,

Personally, I don;t invest in india market but from what I heard is that the Indian market have quite a lot of good companies listed.

The amount of spend time and analysis of the corporate bonds is equivalent to analyse of the actual company. Hence, you may want to focus on the company with low debt in India instead of the bonds.