India’s bond market set for steady growth over next five years: ABSL AMC’s Balasubramanian

A Balasubramanian, Managing Director and CEO at Aditya Birla Sunlife Asset Management Company, has expressed a bullish outlook on the Indian bond market, predicting that it "can only get better" over the next four to five years.

Drawing on his extensive experience in the fixed income space since 1992, Balasubramanian traced the market's evolution and outlined key drivers for its future growth.

He noted the market has matured significantly since then, evolving from a period of high coupon rates to a more holistic and transparent ecosystem encompassing a wide range of instruments, from money market products to long-term government and corporate bonds.

Looking ahead to 2026 and beyond, he said the outlook “can only get better”, especially as platforms such as Online Bond Platform Providers (OBPPs) and SEBI-regulated Request for Quote (RFQ) platforms improve transparency and price discovery. These platforms are making yields, volumes, and outstanding issuances more visible, which is helping bring awareness and participation, particularly from retail investors.

Balasubramanian expects bond issuances to rise over the next four to five years as companies rethink how they fund growth. In recent years, equity markets have been the preferred route for capital raising, but he believes this will gradually change.

As cost of capital in the bond market remains relatively low, companies may increasingly choose debt over equity to avoid excessive dilution. Funding growth through bonds can also improve return on equity, as companies can use leverage more efficiently while preserving shareholder value.

Furthermore, Balasubramanian pointed to the government's successful efforts in reducing the fiscal deficit as a key enabler for the corporate bond market. As government borrowing decreases, it creates more room for private sector companies to issue bonds, a trend he expects to accelerate over the next five years.

He also credited regulatory and industry initiatives for increasing market transparency and participation, such as the bond platform created by industry players for price discovery and the Securities and Exchange Board of India (SEBI)-regulated Request for Quote (RFQ) platform, which has improved trading data points.

For investors, he concluded that the bond market should not be ignored, as it provides tangible and visible returns through regular coupon payments.

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