Budget 2018: Proposal on A-rated paper likely to deepen bond market

Allowing fund managers to invest in 'A' rated securities paper is expected to expand the bond market, improve liquidity in debt instruments and allow long-term players like insurance and pension companies to earn higher returns.

The Union Budget proposals said corporate bonds rated ‘BBB’ or equivalent are investment grade. In India, most regulators permit bonds with the ‘AA’ rating only as eligible for investment; it is time to move from ‘AA’ to ‘A’ grade and the government and regulators will act.

N S Venkatesh, chief executive, Association of Mutual Funds in India, said this was one step to deepen the