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Time of India
4 hours ago
- Time of India
Lock in High Yields Now: Jiraaf's Saurav Ghosh on Why Corporate Bonds Are a Standout Bet
In an environment of persistent equity market volatility and a shifting global trade landscape, debt is stepping into the spotlight. Saurav Ghosh, Co-Founder of Jiraaf, explains why high-yield corporate bonds are emerging as one of the most attractive opportunities of 2025. From locking in double-digit returns ahead of expected rate cuts to capitalising on India's resilient economic fundamentals and healthy corporate balance sheets, Ghosh outlines why now may be the perfect time for investors to secure stable, predictable income in their portfolios. Edited Excerpts – Bonds Corner Powered By Lock in High Yields Now: Jiraaf's Saurav Ghosh on Why Corporate Bonds Are a Standout Bet Saurav Ghosh of Jiraaf highlights high-yield corporate bonds as attractive in 2025. Equity market volatility and global trade shifts favor debt. India's strong economy and healthy corporate balance sheets support this. Rate cuts are expected, boosting debt markets. Online bond platforms are gaining traction. High-yield bonds offer stability and predictable returns for investors seeking diversification. Donald Trump embarks on $104 million bond-buying spree while in office Japan's 20-year bond yields rise for 8th day as fiscal concerns mount Sovereign upgrade, index flows and GST reform create a strong bond market backdrop: Chirag Doshi, LGT Wealth India Corporate bond re-rating to be gradual but meaningful; high-grade issuers may move closer to AAA: Saurav Ghosh of Jiraaf Browse all Bonds News with Kshitij Anand: Given the uncertainty across the globe, whether geopolitical or trade- and tariff-related, will we see new highs in H2 — the second half of 2025 — or do you expect further consolidation at this point in time? Saurav Ghosh: Right now, the norm of the hour is obviously volatile markets. The US trade policy has kept everyone on their toes. The US tariff consists an existing 25% levy and an additional 25%. As we all expect, these conversations are going to continue and there will be some to-and-fro between the two countries over the next few weeks. As the geopolitical environment remains volatile, the equity markets follow suit and remain volatile. Live Events What I would expect for the next half of the year is a phase of consolidation. We might see brief rallies in the equity markets during periods of calm, but overall, given the volatility in the geopolitical environment, the equity markets are going to remain choppy. I do not expect a post-COVID-type clear bull rally in the equity markets. Instead, it will be a phase of consolidation with brief rallies — that, I would expect, will be the norm for the balance of 2025. Kshitij Anand: So volatility will remain throughout the rest of 2025. Now, despite internal macroeconomic stability, how exposed are Indian markets to external risks such as oil price fluctuations or trade realignments? Saurav Ghosh: India is definitely not immune. We have taken several measures to absorb some of the shocks — for example, India dealing in oil with Russia or our trade policy with the UK. These measures have reduced dependency on the US or, in general, the rest of the global markets. But India is still not immune. For instance, the US tariff policy can have an impact of around 0.4% of GDP. The US tariff stance is something everyone will closely watch. That said, India remains a very resilient economy. Domestic growth is strong, inflation is at some of the lowest levels we've seen, domestic demand is robust, and forex reserves are high. So, while India is exposed to geopolitical risks and external factors like movements in oil prices and tariff policies, the country is otherwise in great shape. Watch the livestream below: Volatility & Yield: India's 2025 Playbook Kshitij Anand: Geopolitical risks are widely discussed in equity terms, but what about the impact on debt markets? Saurav Ghosh: In volatile markets and geopolitical environments, investor sentiment typically shifts towards a 'flight to safety.' This means global investors may gravitate toward US 10-year treasuries as their go-to investment asset class. You might see some global capital moving there. Even Indian domestic investors tend to prefer debt markets when equity markets are volatile. Debt markets tend to do well in such times, and sometimes we even see yield compression. Globally, inflation remains uncertain due to trade disruptions, and investors are waiting to see how it plays out and what stance central banks take on interest rates — which will affect global debt markets as well. In India's case, growth is strong, and the RBI has made it clear that it is prioritising growth over the next 12 months. We've already seen multiple rate cuts. This, combined with India's attractiveness to both domestic and global investors, makes me expect a lot of capital inflows into Indian debt markets over the next six to eight months. Kshitij Anand: US yields have remained elevated, but does the tightening of the yield spread weaken India's appeal to global bond investors? Saurav Ghosh: Currently, the US 10-year G-Sec yield is between 4.2% and 4.3%. India is around the 6.3% mark, so that's a spread of about 200 bps to 220 bps — a range it has held for a while. India, as an emerging market economy that is very stable, with strong domestic growth and a resilient economy, looks highly attractive to global investors. In fact, the 200 bps spread over the US G-Sec yield makes India very appealing, given the rest of the fundamentals are in great shape. Yes, the yield spread has compressed from historical levels of around 400 bps to today's 220 bps, but India still continues to be very attractive to global investors. Another factor driving this appeal is the expectation that the RBI will be more accommodative in its interest rate policy going forward, given the strength of the overall economy. Many believe there will be further interest rate cuts in the next six months, which could lead to a rally in the debt market. So, despite the 200–220 bps credit spread from the US 10-year G-Sec, India remains a very attractive market. Kshitij Anand: Should the debt market prepare for a rate-driven rally in the second half of the year? Saurav Ghosh: Yes. Globally, the US has not yet moved aggressively on interest rate policy due to trade uncertainties, and they are still in a wait-and-watch mode. However, there is a strong expectation that the US will also start easing rates, leading to some global rate cuts as well. With global markets easing and the RBI expected to deliver on rate cuts, I think the second half of 2025 should see a very strong debt rally, fuelled by these rate cuts. Right now is a great time to lock in high rates by investing in long-duration debt papers and corporate bonds. Over the next six months, you should definitely see a debt rally. Kshitij Anand: Are high-yield corporate bonds truly an opportunity in the current landscape? Saurav Ghosh: Yes, absolutely. Beyond the expectation of rate cuts, high-yield bonds with long durations — even from 12 to 48 months — present a great opportunity to lock in rates today. But there are also other factors that make them attractive. For example, equity markets continue to be volatile, so you can't be sure what kind of fluctuations you'll have to deal with over the next 12 to 18 months. Investment-grade corporate bonds give you predictability and the assurance of fixed returns, making them a strong asset class in your portfolio. Secondly, from a corporate market perspective, Indian companies now have some of the healthiest balance sheets post-COVID. Corporate debt levels are at some of their lowest, and defaults or delinquencies in investment-grade papers are minimal. So, a combination of volatile equity markets, the ability to lock in rates for a long duration while expecting rate cuts, and an overall strong credit environment makes this a wonderful time to allocate a good portion of your portfolio to high-yield corporate bonds. Watch the livestream below: Volatility & Yield: India's 2025 Playbook Kshitij Anand: Are OBPP, or online bond platform providers such as yours, witnessing greater traction in 2025 due to the need for predictable income and yield-based stability? Saurav Ghosh: Absolutely. As an online bond platform, we are democratising access to fixed-income products through our platform, Jiraaf. On Jiraaf, you can access investment-grade bonds — from G-Secs, which yield about 6%, all the way up to 14% for the investment-grade bonds we offer on our platform. Since the start of the year, given that markets have remained volatile for six to eight months now, and with the RBI having already cut rates by almost one percentage point and further cuts expected, we have seen a lot of traction from individual investors on our platform. They are rapidly increasing their allocation to fixed income. A lot of people have not invested directly in fixed income so far because equity markets have performed well for a long period. But those who already have exposure to the asset class are ramping up their allocation significantly in the last six months. In addition, we have seen a large number of new investors entering the market, obviously to earn some predictable returns in volatile times. Kshitij Anand: We are going to talk a little bit about risk as well. Is the strong push behind high-yield bonds a fair reflection of their risk–reward profile in today's market, especially when compared to, let's say, richly valued equities? Saurav Ghosh: Equity markets are obviously volatile. Whether valuations are elevated or not is anyone's guess. But in these times, with high-yield corporate bonds, you can comfortably earn yields in the range of 10% to 14%, depending on your risk appetite. Given these are investment-grade papers, delinquencies are currently at historical lows, and corporate balance sheets are very healthy. In fact, from a risk-adjusted perspective, investment-grade corporate bonds are very attractive right now. Especially given the volatility in equity markets, this asset class becomes even more appealing in today's environment. It's a great time to participate and at least diversify away from equity markets, as that will help balance and provide the stability every financial portfolio needs.
Economic Times
9 hours ago
- Economic Times
Sovereign upgrade, index flows and GST reform create a strong bond market backdrop: Chirag Doshi, LGT Wealth India
India's bond market is entering a supportive phase, buoyed by a rare confluence of tailwinds. The recent sovereign rating upgrade by S&P, coupled with ongoing index inclusions and the government's push for GST reform, is setting the stage for lower yields, stronger foreign participation, and improving credit dynamics. According to Chirag Doshi, CIO–Fixed Income at LGT Wealth India, these factors are creating a constructive backdrop for government securities as well as high-grade corporate bonds, with banks, top-tier NBFCs, and infrastructure financiers likely to be the early beneficiaries. Edited Excerpts – ADVERTISEMENT Kshitij Anand: Let us understand the impact of the India's sovereign rating update that happened. Yes, it was quite a surprise last weekend, but we have been upgraded from BBB minus to BBB. And how could it impact the yield on government securities in the short to medium term? Chirag Doshi: Two things are visible already. First, the immediate action or reaction from the market side was a dip in the government bond yields as the markets priced in a lower sovereign risk premium after the upgrade happened by S&P and which moved India to BBB from BBB minus on August 14th. The 10-year yield softened by roughly 7 basis points around the announcement, though they have retraced back now, but which reflects improved confidence and the prospect of a deeper foreign participation that you may see in India, that is for short term. But in the medium term, the upgrade alongside the ongoing index inclusion that is already there should anchor the term premia lower and this also is subject to the fiscal glide path staying credible from the government side. Kshitij Anand: And could this rating upgrade lead to a re-rating of Indian corporate bonds? And if so, which segment or sectors or if you want to probably stick to the corporate bond market on that? Chirag Doshi: I think a sovereign upgrade typically relaxes the sovereign cap for high quality issuers. We have already seen S&P has upgraded 10 financial institutions, including SBI and HDFC Bank post the upgrade. So, right after the sovereign action, we have seen that these upgrades have come. ADVERTISEMENT The immediate beneficiaries are, in my view, banks, top tier NBFCs, and quasi sovereigns in the infrastructure financing space where spread should compress fastest as offshore and onshore investors will start reassessing the risk. Unlock 500+ Stock Recos on App More broadly, the IG corporates, the investment grade bonds with robust balance sheets should see lower funding costs and better secondary market liquidity with this. ADVERTISEMENT Kshitij Anand: What specific factors are creating special opportunities in the bond market right now? Chirag Doshi: So, I see a confluence rating upgrade plus index flows. So, the S&P move coincides with the India's phased JPMorgan emerging market bond inclusion and Bloomberg's emerging market local inclusion for the FAR bonds. ADVERTISEMENT So, structural drivers of steady foreign demand for government bonds, that combination supports price resilience and lowers the hurdle for duration for bond markets in India. Plus, the GST reform heard the prime minister signalled a review and rationalisation of the GST and the government is proposing cuts towards a two-rate structure, which could be 5% and 18%.Markets have already responded positively, the consumption boost can lift corporate earnings and improve the credit metrics in majority of the sectors, basically consumer durables, financials, which can create value in high grade corporate bonds where the access to the bond markets will be easy and at a cheaper cost for them because of this impulse. ADVERTISEMENT And some macro tailwinds, I guess, inflation just at an eight-year low in July and RBI has already begun their easing cycle, we have already seen 100 basis points of cut delivered by them, a supportive backdrop for fixed I think if disinflation persists and growth holds, then there is further room for the policy support which will happen from RBI side, which again will reward the bond markets in India and of course, the corporate bond yields have risen more than G-Sec when the talk of the lowering of GST has happened because it may impact fiscal. But if government manages to maintain that, we will see that these credit spreads in AAA, AA bonds will also start compressing. Kshitij Anand: And how are you positioning duration in the current interest rate environment? Chirag Doshi: Unbalanced but constructive, I think at the core I want to hold longer dated government bonds, not very far longer dated, but on the belly of the curve, which will capture the potential for price gains if the easing cycle extends, which in my view should, complemented by a short- to medium-term investment grade corporate bonds for carry and lower with the 10-year oscillating between 6.35 to 6.45 zone, I believe that this exposure will benefit the without over concentrating risk at one point of the curve, I think the corporate bonds will help the portfolio or the investments have a greater carry. Kshitij Anand: And what about strategy, are you favouring a barbell kind of a strategy, a bullet strategy, or a more neutral approach to manage the duration risk? Chirag Doshi: I am leaning towards a barbell kind of a strategy right now, short end for liquidity and carry and long end for duration or convexity, especially when policy is on a hold after a cut. The US Federal Reserve likely to cut rates in September. So, a pure bullet risks missing either the carry at the front and the convexity at the back. So, a barbell lets you harvest both and rebalance quickly as data evolves. So, if there is something wrong with the view, we can be nimble and quickly we change allocations. Kshitij Anand: But you did talk about the rate cuts at this point in time, but let us get your perspective as to do you see a rate cut in the next 12 months and how is that shaping your strategy? Chirag Doshi: So, our base case is 25 to 50 basis points of additional easing over the next one year, which is, of course, contingent on inflation normalising and the external backdrop staying manageable, which in my view should evolve in the are now expecting the RBI to hold the near term after the June cut with another reduction in the rates later this year, which is view justifies keeping meaningful duration via the medium to longer end G-Secs and selectively extending in the higher grade corporates while avoiding excessive curve risk. Kshitij Anand: And also, from a larger perspective, how does global central bank's action influence Indian bond yields and investor sentiment in the short to medium term perspective as well? Chirag Doshi: They effect in two ways, rates and risk appetite. Markets are pricing in a Fed cut in September while the ECB is pausing after a year of easing. So, if the Fed starts to ease, the global term premia should which will help our yields. Conversely, any hawkish surprise or tariff driven volatility can tighten the global financial conditions and briefly cheapen risk assets. And energy matters too. Brent has softened into the mid-60s, which is a tailwind for India's inflation and current account. So overall, India's upgrade and reform momentum makes us relatively more resilient within the emerging market basket. (Disclaimer: Recommendations, suggestions, views, and opinions given by experts are their own. These do not represent the views of the Economic Times)
Time of India
9 hours ago
- Time of India
Sovereign upgrade, index flows and GST reform create a strong bond market backdrop: Chirag Doshi, LGT Wealth India
India's bond market is entering a supportive phase, buoyed by a rare confluence of tailwinds. The recent sovereign rating upgrade by S&P, coupled with ongoing index inclusions and the government 's push for GST reform , is setting the stage for lower yields, stronger foreign participation, and improving credit dynamics. According to Chirag Doshi , CIO–Fixed Income at LGT Wealth India, these factors are creating a constructive backdrop for government securities as well as high-grade corporate bonds, with banks, top-tier NBFCs, and infrastructure financiers likely to be the early beneficiaries. Edited Excerpts – Kshitij Anand: Let us understand the impact of the India's sovereign rating update that happened. Yes, it was quite a surprise last weekend, but we have been upgraded from BBB minus to BBB. And how could it impact the yield on government securities in the short to medium term? by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like SRM Online MBA | India's top ranked institute SRM Online Learn More Undo Chirag Doshi: Two things are visible already. First, the immediate action or reaction from the market side was a dip in the government bond yields as the markets priced in a lower sovereign risk premium after the upgrade happened by S&P and which moved India to BBB from BBB minus on August 14th. The 10-year yield softened by roughly 7 basis points around the announcement, though they have retraced back now, but which reflects improved confidence and the prospect of a deeper foreign participation that you may see in India, that is for short term. Bonds Corner Powered By Donald Trump embarks on $104 million bond-buying spree while in office Donald Trump's recent financial disclosure reveals extensive bond investments, totaling over $103.7 million since his return to office. These investments include corporate debt from companies like Qualcomm, Home Depot, and Meta, some of which are affected by his administration's policies. Unlike past presidents, Trump has not divested assets or established a blind trust, raising concerns about potential conflicts of interest. Japan's 20-year bond yields rise for 8th day as fiscal concerns mount Euro zone bonds struggle for direction after Ukraine talks, eyes on Jackson Hole Foreign holdings of Italian govt bonds in June see largest rise since 2019 India bonds fall; 10-year yield hits 4-month high as fiscal worries sap demand Browse all Bonds News with But in the medium term, the upgrade alongside the ongoing index inclusion that is already there should anchor the term premia lower and this also is subject to the fiscal glide path staying credible from the government side. Live Events Kshitij Anand: And could this rating upgrade lead to a re-rating of Indian corporate bonds? And if so, which segment or sectors or if you want to probably stick to the corporate bond market on that? Chirag Doshi: I think a sovereign upgrade typically relaxes the sovereign cap for high quality issuers. We have already seen S&P has upgraded 10 financial institutions, including SBI and HDFC Bank post the upgrade. So, right after the sovereign action, we have seen that these upgrades have come. The immediate beneficiaries are, in my view, banks, top tier NBFCs, and quasi sovereigns in the infrastructure financing space where spread should compress fastest as offshore and onshore investors will start reassessing the risk. More broadly, the IG corporates, the investment grade bonds with robust balance sheets should see lower funding costs and better secondary market liquidity with this. Kshitij Anand: What specific factors are creating special opportunities in the bond market right now? Chirag Doshi: So, I see a confluence rating upgrade plus index flows. So, the S&P move coincides with the India's phased JPMorgan emerging market bond inclusion and Bloomberg's emerging market local inclusion for the FAR bonds. So, structural drivers of steady foreign demand for government bonds, that combination supports price resilience and lowers the hurdle for duration for bond markets in India. Plus, the GST reform impulse. We heard the prime minister signalled a review and rationalisation of the GST and the government is proposing cuts towards a two-rate structure, which could be 5% and 18%. Markets have already responded positively, the consumption boost can lift corporate earnings and improve the credit metrics in majority of the sectors, basically consumer durables, financials, which can create value in high grade corporate bonds where the access to the bond markets will be easy and at a cheaper cost for them because of this impulse. And some macro tailwinds, I guess, inflation just at an eight-year low in July and RBI has already begun their easing cycle, we have already seen 100 basis points of cut delivered by them, a supportive backdrop for fixed income. And I think if disinflation persists and growth holds, then there is further room for the policy support which will happen from RBI side, which again will reward the bond markets in India and of course, duration. And the corporate bond yields have risen more than G-Sec when the talk of the lowering of GST has happened because it may impact fiscal. But if government manages to maintain that, we will see that these credit spreads in AAA, AA bonds will also start compressing. Kshitij Anand: And how are you positioning duration in the current interest rate environment? Chirag Doshi: Unbalanced but constructive, I think at the core I want to hold longer dated government bonds, not very far longer dated, but on the belly of the curve, which will capture the potential for price gains if the easing cycle extends, which in my view should, complemented by a short- to medium-term investment grade corporate bonds for carry and lower volatility. So, with the 10-year oscillating between 6.35 to 6.45 zone, I believe that this exposure will benefit the curve. And without over concentrating risk at one point of the curve, I think the corporate bonds will help the portfolio or the investments have a greater carry. Kshitij Anand: And what about strategy, are you favouring a barbell kind of a strategy, a bullet strategy, or a more neutral approach to manage the duration risk? Chirag Doshi: I am leaning towards a barbell kind of a strategy right now, short end for liquidity and carry and long end for duration or convexity, especially when policy is on a hold after a cut. The US Federal Reserve likely to cut rates in September. So, a pure bullet risks missing either the carry at the front and the convexity at the back. So, a barbell lets you harvest both and rebalance quickly as data evolves. So, if there is something wrong with the view, we can be nimble and quickly we change allocations. Kshitij Anand: But you did talk about the rate cuts at this point in time, but let us get your perspective as to do you see a rate cut in the next 12 months and how is that shaping your strategy? Chirag Doshi: So, our base case is 25 to 50 basis points of additional easing over the next one year, which is, of course, contingent on inflation normalising and the external backdrop staying manageable, which in my view should evolve in the way. Economists are now expecting the RBI to hold the near term after the June cut with another reduction in the rates later this year, which is possible. That view justifies keeping meaningful duration via the medium to longer end G-Secs and selectively extending in the higher grade corporates while avoiding excessive curve risk. Kshitij Anand: And also, from a larger perspective, how does global central bank's action influence Indian bond yields and investor sentiment in the short to medium term perspective as well? Chirag Doshi: They effect in two ways, rates and risk appetite. Markets are pricing in a Fed cut in September while the ECB is pausing after a year of easing. So, if the Fed starts to ease, the global term premia should compress. So, which will help our yields. Conversely, any hawkish surprise or tariff driven volatility can tighten the global financial conditions and briefly cheapen risk assets. And energy matters too. Brent has softened into the mid-60s, which is a tailwind for India's inflation and current account. So overall, India's upgrade and reform momentum makes us relatively more resilient within the emerging market basket.
