India’s corporate bond market – US$ 500 billion in size – is currently crowded with AAA and AA rated bonds, accounting for over 90% of outstanding bonds. AAA and AA bonds may be considered safe but generate negligible inflation-adjusted yields.
Below AA ratings therefore, a significant opportunity exists. This space – we call it Mid-Market Performing Credit – is highly under-penetrated and lacks adequate discovery. The issuers are operating companies ranging from unrated to ‘A’ rated, borrowing at steep rates. Over the last decades, banks, mutual funds and NBFCs have not been able to address the requirements of debt capital of these companies.
Vivriti has, over the last 3 years, launched seven highly differentiated performing credit funds and raised Rs 20 billion of risk appetite. These funds aim to meet investors’ appetite for returns in excess of debt mutual funds, while tightly controlling risk.