Indian corporate bond market to double in the next six years, says CRISIL

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₹43 lakh crore in FY24 to ₹100-120 lakh crore in FY30, according to a report by CRISIL Ratings. The growth rate will majorly be driven by three factors on the supply side and one on the demand side of the Indian corporate bond market, the report stated.

"While large capital expenditure (capex) in the infrastructure and corporate sectors, growing attractiveness of the infrastructure sector for bond investors and strong retail credit growth are expected to boost bond supply, rising financialisation of household savings should drive demand," said Somasekhar Vemuri, Senior Director, CRISIL Ratings, adding that regulatory interventions were helpful too. Investments in infrastructure and corporate sectors are anticipated to be fueled by the highest capacity utilization in a decade, robust corporate balance sheets, and a positive economic outlook, as highlighted by CRISIL in its statement.

The note further predicts capital expenditures of approximately ₹110 lakh crore in these sectors from FY23 to FY27, marking a 1.7x increase compared to the levels observed in the preceding five fiscal years. Moreover, investors find infrastructure assets appealing due to their enhanced credit risk profile, potential for recovery, and long-term characteristics.

While infrastructure constitutes only 15 percent of the annual corporate bond issuance by volume, ongoing structural enhancements, backed by diverse policy measures, are expected to render infrastructure bond issuances attractive to patient-capital investors such as insurers and pension funds, who play a pivotal role in the bond market. Regarding the expansion of retail credit, the report anticipates a sustained momentum, backed by the growth in private consumption and the formalization