India Shadow Bank Woes Send Bond Premiums to Highest Since 2013
- Spreads on non-bank bonds have spiked since IL&FS stumble
- Shadow bank woes are widening as more lenders face downgrades
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Indian shadow banks’ woes are worsening by the day with investors now demanding the highest premium in six years to hold their short-term debt.
Spreads on top-rated one-year bonds of Indian non-bank lenders over government bonds of the same maturity have risen 63 basis points since India’s mini-Lehman moment when the systemically important Infrastructure Leasing & Financial Services Ltd. was cut to default in September. This is the widest level since 2013, according to data compiled by Bloomberg.