Indian market linked debentures (MLD) is expected to reach Rs 8,200 crore by end of current fiscal (FY17) on the back of strong demand, optimistic market sentiments and moderate to low interest regime, as per Care Ratings.

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Between (April 2016 – till date), the MLD market has reached at Rs 7,730 crore, a rise of 58.59% as against Rs 4,874 crore in the similar period of last fiscal (FY16).

Average monthly issuance under MLD, has also doubled to Rs 600 crore so far in FY17, compared to Rs 300 crore in FY16.

As per Care, this performance was boosted by higher participation from corporates in addition to existing HNIs, increase in ticket size, acceptance of MLDs with underlying other than Nifty (i.e. G-sec, corporate bonds etc.) and Investors’ emphasis on downside protection in volatile market conditions.

Outstanding MLDs stood at Rs 10,000 crore as of FY17 versus Rs 6,800 crore as on FY16.

ML D are refered as hybrid structured product which have zero-coupon bond. Returns are linked to an index such as Nifty or Sensex. There are two types of MLD namely - principal protected (PP-MLD) and non-principal protected (NPP-MLD).

Care's report stated that PP-MLD issuance has reached to five year high at Rs 712 crore as on FY17 compared to Rs 333 crore in FY16. 

The report said, "FY17 witnessed increased investors participation in PP-MLDs with different underlying such as G-sec, Portfolio of listed bonds, basket of stocks/stock etc."

Care said, "Optimistic market sentiments, moderate to low interest rates regime and robust demand is expected to augur well for MLD market. This market is also expected to witness elevated issuances in FY18 along with entry of new issuers. "