Corporate bond market set to double by FY2030 at Rs. 100 trillion (US$ 1.19 trillion): Report by CRISIL
- IBEF
- December 5, 2023
According to a recent CRISIL Ratings report, India's corporate bond market is anticipated to experience significant growth, surpassing Rs. 43 trillion (US$ 579 billion) in the financial year 2022-23 and reaching a projected range of Rs. 100-120 trillion (US$ 1.3 - 1.6 trillion) by the fiscal year 2030.
The market is set to grow at a 9% CAGR, fuelled by increased capital expenditure (capex) in infrastructure and corporate sectors. Strong capacity utilization, healthy corporate balance sheets, and a positive economic outlook drive this growth. Capex in these sectors is expected to surge to Rs. 110 trillion (US$ 1.5 trillion) between FY23 and FY27, marking a 1.7-fold increase compared to the previous five years. The corporate bond market is projected to finance around one-sixth of this capex, with the trend expected to continue beyond FY27.
CRISIL highlights the allure of infrastructure assets as investments, citing favourable credit risk profiles, recovery potential, and their long-term nature. Though constituting only 15% of annual corporate bond issuance, policy-driven structural enhancements are expected to make infrastructure bonds more attractive to capital investors like insurers and pension funds. Retail credit is poised for growth, supported by private consumption and the formalization of last-mile credit flow. The bond market, crucial for funding large non-banking financial companies (NBFCs), is anticipated to be a key player in financing retail credit.
India is witnessing a shift toward financial assets, with individuals moving from physical assets like real estate and gold. Managed investments, boasting a CAGR of approximately 16% in the past five years, surpassed bank deposits' growth (10%). Factors such as digitalization, investor sophistication, retirement planning, insurance utilization, investment objectives, and a growing middle income contribute to the upward trajectory of managed investments.
Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.
Partners
