Default Risk for Indian Firms Drops At Fastest Pace in Decade

Default risks for Indian firms are declining at the fastest pace in more than a decade as the nation’s government deploys huge stimulus to support local companies hit by the impact of the pandemic.

The cost to insure against nonpayment by a basket of Indian companies including Reliance Industries Ltd. and State Bank of India dropped by 252 basis points in May and June combined, the most for any two-month period dating back to 2009, according to CMA prices. Prime Minister Narendra Modi’s government unveiled $277 billion of stimulus in May and the central bank cut benchmark borrowing rates to the lowest since at least 2000 to help an economy that’s facing a contraction after the world’s largest lockdown.