CRISIL envisages about Rs 110 lakh crore of capital inflows into these sectors between fiscal 2023 and 2027, which is about 1.7 times higher than the previous five fiscals. (Representative photo)
CRISIL Ratings expects the outstanding market size to more than double to around Rs 43 lakh crore
The Indian corporate bond market is poised for rapid growth despite clocking a compound annual growth rate (CAGR) of nine percent over the past five years. CRISIL Ratings expects the market’s outstanding size to more than double to Rs 100-120 lakh crore by fiscal 2030 from around Rs 43 lakh crore last fiscal, it said in a statement on Monday.
“Growth will be driven by a combination of factors. Large capital expenditure (capex) in the infrastructure and corporate sectors, increasing attractiveness of the infrastructure sector to bond investors and strong retail credit growth are expected to boost bond supply, while rising financialization of household savings will drive demand. Regulatory intervention is also helpful,” said Somesekhar Vemuri, Senior Director, CRISIL.
He said capex in the infrastructure and corporate sectors is expected to be driven by the decade’s high capacity utilization, healthy corporate balance sheets and a favorable economic outlook.
CRISIL envisages about Rs 110 lakh crore of capital inflows into these sectors between fiscal 2023 and 2027, which is about 1.7 times more than the previous five fiscals. The rating major expects this pace of capex to continue beyond fiscal 2027.
The corporate bond market is expected to finance about one-sixth of the expected capex.
Infrastructure assets are emerging as strong contenders for investment due to their improving credit risk profile, promising recovery prospects and long-term nature.
Currently, infrastructure accounts for only 15 percent of annual corporate bond issuance volume, the note said.
However, structural improvements facilitated by a raft of policy measures are expected to make infrastructure bond issues more attractive to patient-capital investors, particularly insurers and pension funds, who form the core investor segment of the bond market.
CRISIL estimates that assets in the managed investment segment will double to around Rs 315 lakh crore by 2027, and the trend is expected to continue in the previous fiscal year 2027. These investments will be in both equity and debt and a good part of it may flow to the corporate bond market.
The agency said retail credit growth is expected to maintain its momentum, driven by increased personal consumption and the formalization of last-mile credit flows.
The bond market, an important funding source for larger NBFCs and accounting for a third of the funding mix, will play an important role in financing retail credit flows.
Managed investments are expected to outpace bank deposits in view of growth
Factors such as increased digitization, growing sophistication of investors in retirement planning, higher awareness and use of insurance, investment objectives to outpace inflation and growing middle-income population are contributing to the growth of managed investments.
(This story has not been edited by News18 staff and appears from a syndicated news agency feed – PTI)
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