The corporate bond market growth is expected to gather pace in the coming years, and its overall size is likely to more than double to over ₹100 lakh crore by March 2030, domestic credit rating agency Crisil said.
In a report, Crisil said, the push to capital expenditure, attractiveness of the infrastructure sector and the financialisation of savings would be key drivers of growth.
It said in the last five years till March 2023, the corporate bond market grew 9% per annum to ₹43 lakh crore, and is likely to more than double to over ₹100-120 lakh crore by March 2030.
The agency’s Senior Director, Somasekhar Vemuri, said regulatory interventions would also help growth.
The growth in capex will be driven by high capacity utilisation, healthy corporate sector balance sheets and strong economic outlook, the agency said, adding that the period till FY27 alone will see investments of over ₹110 lakh crore.
The corporate bond market is expected to finance a sixth of the estimated capex, the agency said.
The credit risk profile for infrastructure assets is getting stronger, with better recovery prospects and the ability to lend long-term, the agency said, noting that at present only 15% of corporate bond issuances go to infrastructure.
Its Director Ramesh Karunakaran said relaxing the investment restrictions on corporate bonds rated below ‘AA’ for insurance and pension funds and fortifying the credit default swaps market will be helpful for the industry’s growth.
Demand for corporate bonds will also be driven by non-bank lenders looking to serve credit demand from the retail segment, the agency said.
Higher ‘retailisation’ of credit is being led by non-bank lenders, the agency said, pointing out that the share of retail credit stands at just 30% of India’s GDP as against 54% in the US.