Debtonnet to offer transparent debt trading platform

Sujoy Manna

Mumbai, Aug 3: Debtonnetindia.com aims at providing a transparent and efficient transaction platform for the wholesale primary debt market.

The transaction platform will also include a bidding module which will act as an interface between the issuers and the investors.

The debt market is typically an unorganised telephone-based market with undisclosed and private deals. The valuation norms are also opaque, leading to inefficient price discovery of the issues.

The market is accessible to only a few cash rich corporates whose issues are subscribed by few institutions. The trading platform can effectively remove all these drawbacks through better price discovery and increased market participants.

Speaking to The Financial Express, Debtonnetindia.com chief executive officer Anupam Gupta said,”The transaction platform will allow for quick interaction between the investors and issuers and ultimately lead to a better price discovery. The platform will also enable issuers and investors situated in two different locations to interact with minimum time lag.”

“We are also exploring the idea of implementing online settlement and payment mechanism in the platform in the long run. We are in dialogue with certain private banks and the Clearing Corporation of India, although the matter is still at a premature stage,” added Mr Gupta.

The portal is an electronic market place for issuers, investors and intermediaries, offering a transparent price discovery mechanism to
issuers, market information to investors and settlement/subscription backbone for intermediaries.

The bidding module can enable investors to bid on the amount for a particular paper at a given rate. Alternatively, under a book-building process, investors can bid the amount, as well as the rates at which they want to subscribe. The issuers then decide on the cut-off-rate, based on the bids received.

Debtonnet India has hosted issues aggregating around Rs 2,000 crore, including issues of Konkan Railway Corporation (KRCL), Larsen & Toubro NCDs and REC on private placement basis on the web.
The private placement market which has seen continuous growth is now poised for a significant jump due to higher amount of capital requirement by infrastructure projects, retail participation, dematerialisation of debt and electronic payment mechanisms.