• UGI USER
  • Dec 06, 2023
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CORPORATE BOND MARKET SET TO DOUBLE BY 2030

Why in the News?

The corporate bond market is poised for substantial growth, expected to more than double to ₹100-120 lakh crore by March 2030, according to Crisil, the domestic credit rating agency.

About CRISIL:

  • CRISIL is one among the six credit rating agencies in India
  • Registered under SEBI

What are corporate bonds?

Corporate bonds represent debt securities issued by private firms or companies to secure funds from the public. Investors in these bonds, known as bondholders, provide financial support to the company by purchasing the issued corporate bonds.

Drivers for Growth:

Key drivers identified for this surge include ;

  • a push for capital expenditure,
  • the appeal of the infrastructure sector, and
  • the financialization of savings.

Highlights :

  • Current Market Trends: Over the last five years until March 2023, the corporate bond market has witnessed a 9% annual growth, reaching ₹43 lakh crore.
  • Capital Expenditure Boost: Investments of over ₹110 lakh crore are expected by FY27, with the corporate bond market contributing substantially to financing, supporting approximately a sixth of the estimated capex.
  • Recommendation for Industrial Growth:
    • Regulatory interventions such as relaxing investment restrictions on corporate bonds rated below ‘AA’ for insurance and pension funds.
    • Strengthening the credit default swaps market is also highlighted as a factor fortifying industry growth.

 The corporate bond market’s projected expansion aligns with demand fueled not only by traditional sectors but also by non-bank lenders responding to credit demand.