InvestorQ : When Indian corporate bond market double?
Chandralekha Desai made post

When Indian corporate bond market double?

Mitali Bhutta answered.
3 months ago

Just recently, ratings agency Crisil has come out with a report stating that the Indian bond market is expected to double in size to Rs60-65 lakh crore by 2025. Crisil expects the bond market to fill in the gap between India’s massive infrastructure funding needs and capital crunch that the sector faces at present.

According to the report, the National Infrastructure Pipeline envisages Rs 111 lakh crore of investments between fiscals 2020 and 2025 for India’s infrastructure build-out. Raising such humongous amounts – an onerous ask even in normal times – has become even more difficult because of the fiscal stress caused by the Covid-19 pandemic. However, there are various hindrances to this path that need to be addressed. There needs to be supply-side innovations like pooling of assets, a well-capitalized Credit Guarantee Enhancement Corporation, and widespread adoption of the INFRA Expected Loss (EL) rating scale.

On the demand side, credit default swaps, retail participation, index linked funds, and mechanisms to improve liquidity will be enablers. Besides these, attracting foreign capital is crucial to bridging the emerging supply-demand gap, especially given the crowding-out by gilts stemming from the huge borrowing programme of the government, Crisil report said.