CRISIL Research, India’s largest independent and integrated research house, has announced the launch of two new indices – the CRISIL 10 Year SDL Index and the CRISIL Ultra Short Term Debt Index.

CRISIL’s rating actions in fiscal 2017 indicate credit quality of IndiaInc is gradually recovering. The CRISIL 10 Year SDL Index is India’s first liquid index to track state development loans (SDLs). The CRISIL Ultra Short Term Debt Index, on its part, will serve as a benchmark for funds with a residual maturity of 9 months to 1 year, which is shorter than that of short-term debt funds but greater than that of liquid funds.
 

Says Nagarajan Narasimhan, Senior Director, CRISIL Research: “With this, CRISIL now has indices representing all debt market assets in India. Apart from the two just launched, we have 45 indices across bond, gifts, money market, hybrid and commodity segments, which are used by asset managers for benchmarking their products and portfolios. CRISIL will continue to develop indices that help market participants gauge the performance of different asset classes and make investment decisions in an otherwise shallow debt market.”

The CRISIL 10 Year SDL Index adds to the six indices CRISIL has for tracking sovereigns. SDLs are issued by state governments and are considered sub-sovereign securities. The SDLs tracked have a residual maturity of around 10 years. Annualised return on the index over the past five years works out to 10.74% – better than the 10.28%, the CRISIL AAA Long Term Bond Index has delivered despite having higher credit risk.

Jiju Vidyadharan, Senior Director, CRISIL Funds and Fixed Income Research, said, “With gross bond issuances in SDL gaining momentum and the amount outstanding touching Rs 20.9 trillion, it has become imperative to track the performance of this segment. Over the past 9 years, annual issuances of SDL bonds rose at 13% CAGR, indicating a growing market. On the other hand, the asset base of ultra-short term debt funds has escalated 2.6 times since 2013 to Rs 2 trillion as of March 2017, highlighting the need for an appropriate benchmark for such funds.”

The CRISIL Ultra Short Term Debt Index has clocked an impressive performance with 9.41% returns since inception (i.e. September 30, 2010).

All CRISIL indices are public indices with details on index performance and portfolio constituents available on the CRISIL Indices website (www.crisil.com/capital-markets/indices.html ) daily.