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Indian stock brokers drive $33 billion in short term debt issuance
Brokers’ share of India commercial paper issuance rose to about 21% from 4% in 2021, highlighting how leverage demand is spilling into the short term debt market.
Indian stock brokers have become a major source of short term debt in India, raising about 3.2 trillion rupees, or roughly $33 billion, through commercial paper this year, according to primedatabase.com data cited by LiveMint Markets.
The report says brokers accounted for about 21% of commercial paper issuance so far this year, up from just 4% in 2021, as their borrowing supports investors’ appetite for leveraged equity bets.
That activity is linked to growth in margin trading, with the value of leveraged equity positions approaching a record 1.6 trillion rupees as of Sept. 30, the article says, adding to brokers’ funding needs even amid stock declines tied to surging oil prices and higher global yields.
Kotak Securities Ltd. COO Sandeep Chordia said the increase in commercial paper issuance by brokers aligns closely with the growth of their margin trade facility books, and that the linkage is expected to continue as MTF scales up, the outlet reported.