Crisil says corp bond supply may double by FY23

Credit rating agency Crisil expects the supply of corporate bonds to increase to Rs 55-60 lakh crore by the end of fiscal 2023, double that of Rs 27.4 lakh crore seen at the end of fiscal 2018, led by increase in bond issuances from financial and infrastructure sectors.

However, demand for these instruments is expected to be over Rs 53 lakh crore, led by retirement funds, insurance companies, mutual funds, foreign portfolio investors and banks. This means that there is a Rs 2-7 lakh crore gap between supply and demand.

“To structurally bridge the demand-supply gap, we need a big step-up in investor awareness, better coordination across the ecosystem, continuation of regulatory reforms, and introduction of new instruments and hedging mechanisms. While stabilisation of the process and quicker resolutions under the Insolvency and Bankruptcy Code would increase investor confidence, any measure to improve market liquidity will provide a significant leg-up,” said Ashu Suyash, CEO, Crisil.


The rating agency expects the corporate bond market’s footprint to increase to 20% of GDP over the next five fiscals from 16% now.