With an aim to develop the corporate bond market, the Securities and Exchange Board of India on Friday urged pension funds and other long-term investors to support municipal bond issuances and start considering other assets such as real estate investment trusts and infrastructure investment trusts.
"I would like to urge pension funds and other insurers to start considering these assets (REITs and InvITs) in their portfolios as well. We see healthy requests from corporate wealth funds and pension funds but it needs to be complimented with our own domestic institutional participation," SEBI's Executive Director Pramod Rao said at the Assocham's National Summit and Awards Corporate Bond Market 2024.
Speaking about deepening India's corporate debt market, Rao said that the SEBI is continuously working on steps to develop the corporate bond market and said that there is a need to ease doing business, which will encourage issuers to tap the market.
With online bond platform providers gaining prominence, Rao said that they must retain investors' trust and behave responsibly. He expects volumes in repo transactions of corporate bonds to increase going forward.
On a similar note, the State Bank of India's Managing Director, Ashwini Kumar Tewari, said that the corporate bond market has a long way to go and hasn't found the answer as to how to support lower-rated issuances.
While there is a need for the bank loan market and the corporate bond market to go hand in hand until the bond market comes of age, Tewari expects the bond market to get bigger than that of bank loans.
With the government's rising thrust on infrastructure, Tewari said that the bond market will be a more viable option for financing long-term infrastructure projects compared to loans.
Additionally, Life Insurance Corporation of India's MD Doraiswamy said that he is keen on increasing corporate bond investments for infrastructure developments and is looking at investing in REITs and InVITs.
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