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Defaulted India Shadow Bank Is Major Player in Local Debt Market

  • IL&FS’s commercial paper is 2% of market in India: Moody’s
  • Moody’s says firm’s liquidity issues are negative for banks

It’s little wonder that debt defaults by key Indian shadow bank Infrastructure Leasing & Financial Services Ltd. have shocked credit traders: not only are nonpayments rare in the country, but the conglomerate is a major player in the market.

IL&FS’s outstanding debentures and commercial paper accounted for 1 percent and 2 percent, respectively, of India’s domestic corporate debt market as of March 31, according to Moody’s Investor Services. And its bank loans made up around 0.5 percent to 0.7 percent of banking system loans, Moody’s said.