Corporate bond growth to be faster, market to more than double to Rs 100 lakh cr by 2030: Report

Demand for corporate bonds will also be driven by non-bank lenders looking to serve credit demand from the retail segment, the agency said. Money getting financialised is increasingly being invested in capital market products at present, the agency said, adding that among financial assets, managed investments have clocked a 16 per cent growth per annum in the last five years, compared with 10 per cent for bank deposits.

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 Rs 100 lakh crore by March 2030, a report said on Monday. Domestic credit rating agency Crisil said push to capital expenditure, attractiveness of the infrastructure sector and also the financialisation of savings will be the key drivers for this growth. It said in the last five years till March 2023, the corporate bond market grew 9 per cent per annum to Rs 43 lakh crore, and is likely to more than double to over Rs 100-120 lakh crore by March 2030. The agency's Senior Director, Somasekhar Vemuri, said regulatory interventions are also helpful in the growth. The growth in capex will be driven by the very high capacity utilisation, healthy corporate sector balancesheets and strong economic outlook, the agency said, adding that the period till FY27 alone will see investments of over Rs 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 also getting stronger, along with better recovery prospects and the ability to lend long-term, the agency said, noting that at present only 15 per cent 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 per cent of the GDP in India as against 54 per cent in the US. Money getting financialised is increasingly being invested in capital market products at present, the agency said, adding that among financial assets, managed investments have clocked a 16 per cent growth per annum in the last five years, compared with 10 per cent for bank deposits. The agency estimated that assets in the managed investment segment will double to Rs 315 lakh crore by FY27, and the trend is expected to continue well past FY27. ''The RBI and Sebi have already mandated large borrowers to tap the corporate bond market for incremental borrowings.'' ''The recent launch of the Corporate Debt Market Development Fund and the setting up of AMC Repo Clearing Ltd by Sebi will help in improving the secondary market liquidity for institutional investors and thereby boost investor confidence,'' Karunakaran said.

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