Bringing institutional-grade research to bonds is a game changer for retail investors: Saurav Ghosh of Jiraaf

The Indian bond market is undergoing a quiet transformation as retail participation gathers pace, but a key gap has long persisted—access to high-quality, easy-to-understand research.

Addressing this, Saurav Ghosh, Co-Founder of Jiraaf, believes that bringing institutional-grade research to the debt market could be a game changer for individual investors.

In an interaction with Kshitij Anand, he explains how traditional reliance on credit ratings often falls short, why issuance-level analysis is critical, and how structured research reports can help investors better understand risk, pricing, and liquidity.

As bond investing becomes more mainstream, such tools could play a pivotal role in making retail investors more informed, confident, and efficient in building their portfolios. Edited Excerpts –
Kshitij Anand: To begin with, if you can help us understand what research reports are and why they are important for investors, which Jiraaf launched recently.

Saurav Ghosh: So, the job of any research report is to essentially simplify complex underlying investment opportunities. I would say most Indian investors are very familiar with the equity segment. There are multiple brokerage houses that release reports on particular companies and stocks. So, you will have, let us say, Motilal Oswal Financial Services giving a buy rating on Reliance Industries Ltd shares—so that is a research report.
Essentially, a research report covers business analysis, the underlying sector and industry that the companies are operating in, and what cash flows are expected. These are complex analyses, and finally, they provide a simplified summary at the end, with the objective of telling the reader what a possible decision could be after having read and consumed all the information in a very structured and simplified manner. So, that is the job of a research report.
Till now, it has mostly been relevant on the equity side of the Indian ecosystem. What we are trying to do is bring that same institutional-grade research to the debt market.
Kshitij Anand: Equity research reports have played a big role in making stock market investing much easier, so how have they helped retail investors?
Saurav Ghosh: Prior to these research reports being available, an Indian investor was not very confident about their own understanding of the subject matter or the underlying investment opportunity. Today, of course, everyone in India does their own kind of research as well because there are so many tools and avenues that are accessible. But while the data is available, how you consume it, summarise it, and come to a final conclusion differs from person to person.

Everyone is looking to build confidence in their own research, and having institutions do that research for you—or having these research reports available—gives every investor confidence in what they are actually investing in. So, as I said, if I am buying a Reliance Industries Ltd stock, I may feel I understand its business, but sometimes it is far more complex than my understanding.

When an institution breaks it down and presents it in a well-documented report, I feel that I understand the business better. I know the numbers better. And when, for example, Motilal Oswal Financial Services gives a buy rating or a target price, it also gives me confidence that this is a good-quality stock to invest in. That is the kind of confidence we are trying to build.

On the flip side, sometimes we also identify pitfalls. If someone gives a sell rating, it may be because they have considered certain factors that we have not. This can help us avoid a bad decision as well. So, that is the aim of research reports.

On the equity side, investors today are far more evolved, financially aware, and actively making investment decisions because research reports have essentially hand-held Indian investors over the last one or two decades. That is also why the understanding of the equity market has evolved to where it is today.

Kshitij Anand: And in fact, if you look at the equity markets, investors have access to research reports, but the Indian bond market did not really have something equivalent to what equity investors used to have. So, why did that gap persist?
Saurav Ghosh: Bond markets are evolving, and traditionally, the bond market has largely been the playground for very large institutions in India. Since it has primarily been an institutional space, these participants have been doing their own in-house research and have not relied on external sources. They have large research and analytics teams, so they do not need to depend on external advice or information to make decisions. Because of this historical participation structure, there was no real need for research reports.

However, over the last three to four years, we have seen retail investors in India increasingly take an interest in bond markets. People are now actively seeking to invest in bonds and include them in their financial portfolios. With the growing participation of individual investors, there is now a need for institutional-grade research—similar to what exists in the equity market—to be made available in bond markets as well. This will help investors access high-quality insights, understand investments better, and ultimately evolve into more informed bond market participants.

Kshitij Anand: In the absence of quality issuance-level bond research, investors often relied mainly on credit ratings, as we discussed earlier in the podcast. What was the problem with that?
Saurav Ghosh: Credit ratings have largely been used as a proxy to assess risk in bond markets, not just by individual investors but also by institutions. However, they have several limitations when it comes to making investment decisions. Typically, a credit rating assesses the overall quality of a company, mostly from a long-term perspective. Ratings are broadly categorised into short-term (less than one year) and long-term ratings, such as AAA, AA, and so on. These primarily evaluate the business and the financial health of the company over a long horizon.

This approach has its limitations. For example, a company may be rated BBB because its five- or ten-year outlook is weaker than that of an AA- or A-rated company. However, that does not necessarily mean it is unsuitable for a one-year investment. A BBB-rated company could perform well in the near term due to favourable sectoral tailwinds, improving company fundamentals, strong collateral, or attractive pricing that enhances the risk-reward equation. Credit rating reports do not address these aspects.

They also do not evaluate whether pricing is competitive, what liquidity is available in the secondary market, or whether an investor can easily exit by finding a buyer. Additionally, they do not provide peer comparisons—how similarly rated issuers or companies in the same industry are priced and traded. These are critical factors for investors when making decisions, such as whether they are getting the best opportunity or the most attractive pricing.

Another key limitation is the lack of issuance-level analysis. In bond markets, investors participate in specific issuances, and each issuance can differ in terms of security, collateral, and covenants. While these are technical aspects, they essentially determine how well a particular issuance is structured from a risk perspective. Credit ratings assess the company as a whole but do not evaluate individual issuances. As a result, one issuance from a company may be highly secure and well-collateralised, while another may be unsecured and carry higher risk.

Since credit ratings often miss these nuances, it becomes important to cover them through institutional-grade research. This is why we have been among the first to introduce research reports for bond markets in India.

Kshitij Anand: I am sure you highlighted many aspects about issuances. So, did this over-reliance on ratings influence investor behaviour in the bond market? Do you see that trend as well?
Saurav Ghosh: One major influence of credit ratings has been on the underlying perception of risk among investors. People tend to believe that AAA- or AA-rated instruments are safe, while anything below that carries a high degree of risk. What individual investors are often unable to do today is quantify risk at each rating level.

While AAA-rated instruments are indeed among the safest in the bond market, it does not mean that a BBB-rated issuer is bad—it simply means it carries relatively higher risk than a AAA-rated issuer. The key question is: can I quantify that degree of risk? If I can, then I can also determine how much additional return I should expect for taking that extra risk, and whether the risk-reward equation is favourable.

This is an important aspect of investing in the bond and debt markets, which many investors struggle with due to the over-reliance on credit ratings as the sole measure of risk. Another important point is that, historically, for bonds with a tenor of less than two to three years, a BBB-rated issuer carries a default risk of less than 2%, while a AAA-rated issuer has a default risk of less than 0.3%. This means the probability of default increases by roughly 1.7% from AAA to BBB, with intermediate ratings falling proportionately in between.

At the same time, AAA-rated companies currently offer yields of around 7.5% in the Indian market, while BBB-rated companies may offer yields closer to 13%. This implies that investors are earning an additional yield of about 5.5% for taking an incremental default risk of around 1.5–1.7%. This is the perspective investors should consider when making decisions.

However, this kind of analysis is often missing due to the over-reliance on credit ratings as the only benchmark. That is why we aim to provide investors with better access to information and a more nuanced, issuance-level perspective, enabling them to make more informed decisions.

Kshitij Anand: Also, could you highlight that while a listed company has one listed equity, it can have multiple listed bonds? Why is that distinction important for investors to understand?
Saurav Ghosh: Yes, this is very important. A company raises debt multiple times during its lifecycle, and each time it does so through a separate issuance in the capital market. In contrast, in the equity market, when a company raises equity capital, all investors are treated equally. Each shareholder owns the same class of shares, and there is typically one share price.

In debt markets, however, each issuance can have different characteristics. For instance, every bond issuance has its own structure of security. It is important to understand whether a particular issuance is secured or unsecured, and if secured, what the underlying collateral is. Additionally, each issuance may come with different covenants. For example, if the company faces a rating downgrade, does the investor receive additional yield? Or do they have the option to exit through early redemption? These are important considerations.

Even for the same issuer, these features can vary from one issuance to another. This means that one issuance may carry a higher degree of risk than another, even though the issuer remains the same. Investors often assume that if a company is rated A, then all its issuances carry the same level of risk, but that is not necessarily true. At the issuance level, risk can vary based on factors such as security, covenants, and structure.

This is why it is crucial to analyse investment opportunities in the bond market at the issuance level. Our research reports aim to address this gap by focusing not just on issuer-level analysis but also on issuance-level details, rather than relying solely on credit ratings.

Kshitij Anand: Now that you have talked so much about research reports, could you also highlight what exactly an issuance-level bond research report is?
Saurav Ghosh: An issuance-level bond research report effectively covers five key aspects. First, we cover the business and the management. These are also partly covered in rating reports. This includes the history of the management, their credentials in running the business, and their background prior to this venture, among other details. It provides a comprehensive view of both the business and the management. On the business side, the report covers the market in which the company operates, the margins in the business, its customer base, and so on.

The second aspect is the financial analysis of the business. While this is also covered in credit rating reports, we go much deeper. The analysis includes profitability at the business level—not just current performance, but also the future outlook—as well as the inherent financial strength of the business, including leverage and other key metrics.

Beyond these two, the remaining aspects are not typically covered in credit rating reports. The third aspect is issuance assessment. Here, we analyse the security package, collateral, and repayment structure—whether payments are monthly or quarterly—as these factors can influence risk. We also compare the issuance with other issuances by the same company to determine whether it is the best available opportunity or if better options exist.

The fourth aspect is pricing. We evaluate how the issuance is priced relative to past issuances, peers within the same sector or rating category, and its pricing in the secondary market where institutional participants are active. This provides a complete perspective on valuation and also indicates the expected liquidity of the issuance.

The fifth aspect is the economic and sector outlook. If you are investing with a one- to two-year horizon, it is important to understand how the underlying sector is expected to perform over that period. A favourable macro or external environment reduces the likelihood of stress on the company.

Overall, the report is built around these five pillars, with the objective of arriving at a comprehensive scorecard that helps investors determine whether a particular issuance is worth participating in.

Kshitij Anand: From a broader perspective, why is issuance-level research especially important in the Indian bond market today?
Saurav Ghosh: I have already spoken about the importance of issuance-level details, but to summarise, there are two additional risks beyond credit risk that investors need to consider: liquidity risk and interest rate risk. These research reports help quantify those risks as well. While credit ratings provide insight into credit risk, issuance-level reports help investors understand liquidity—whether they can exit the investment easily—and whether the issuance is fairly priced.

If an investor enters at the right pricing, their interest rate risk is lower, and even if liquidity tightens, the impact on the bond’s capital value will be limited. This helps investors safeguard their investments and make better decisions.

Lastly, it is important to recognise that while the issuer remains the same, the quality of issuances can differ. A company may offer strong collateral and security to institutional investors but weaker terms in public issuances. Investors should not be at a disadvantage in such cases.

Overall, these reports empower investors with the right set of information to make more informed and confident investment decisions.

Kshitij Anand: And also, can issuance-level research change how investors build bond portfolios now?
Saurav Ghosh: Absolutely, because a lot of times, as I said, with the availability of issuance-level reports, investors will think differently. Let us say a particular BBB-rated company has a balance tenor of one year. Now, you are not just thinking of it as a BBB-rated company; you are thinking, while it is a BBB-rated company, can I take this risk for one year? I am not investing my money for five or ten years—I am just investing for the next one year. So, can I take that risk over this time frame?

With that understanding, people will construct their portfolios very differently because they will view risk differently. And once you look at risk differently, the way you construct your portfolio and think about generating yields and returns from it will completely change. So, with the availability of issuance-level reports, people will become smarter at constructing their financial portfolios than before.

Kshitij Anand: How does Jiraaf RA’s launch address this market gap now?
Saurav Ghosh: I think it is a big game changer. At Jiraaf, we have always been at the forefront of helping our investors gain maximum access to information so that they can make the right decisions. About three months ago, we launched our bond analyser, which is the first bond analytics platform in the ecosystem. It provided access to information, but investors still had to summarise and interpret that information themselves.

We have now taken this a step further with the launch of bond research. This means that investors not only have access to information, but also to structured and summarised insights derived from that data, presented in a simple and easy-to-understand manner. So, people do not need to do all the analysis themselves—they can read the research report and gain a strong understanding of the issuer and the issuance. This helps them make well-informed decisions about whether they want to include a particular bond in their portfolio.

As a result, decision-making becomes quicker, simpler, and more efficient. At Jiraaf, our intent is to provide investors with maximum clarity and complete transparency so that they can confidently make their investment decisions. This initiative goes a long way in enabling that.

Kshitij Anand: Could bond research reports do for bond investors what equity research reports did for stock investors? Can they match expectations? I am sure investors would want to know more about that.
Saurav Ghosh: Yes, 100%. Once you start trusting the research, you start trusting the institution. Over time, research reports can become an everyday tool, just like they have in the equity market. Investors can quickly go through a report—in 30 seconds to a minute—focus on the key data points, and arrive at an investment decision.

It becomes almost like being on autopilot—you see a report, review a few key metrics, and your decision is largely formed. I believe we will reach that stage in the bond market as well. In fact, institutional-grade research could have an even greater impact in the bond market than it has had in equities, because bonds are relatively more complex instruments that require deeper understanding. That is exactly what this initiative aims to provide.

(Disclaimer: Recommendations, suggestions, views, and opinions given by experts are their own. These do not represent the views of the Economic Times)