One of India’s top fund managers is turning bullish on bonds of riskier companies, as an accelerating economic recovery is giving a particular boost to the financial health of such businesses.

       “Lower-rated companies that have not only survived but also improved their operational and financial metrics in the downturn make for an attractive investment proposition now,” said Amit Tripathi, who oversees about $15 billion of debt assets at Nippon India Mutual Fund. Such firms will gain most from an upturn in Asia’s third-largest economy, he said.

       “Many companies have used the pandemic stimulus to clean up their balance sheets by either cutting debt, refinancing at lower costs or raising equity, and they are now in the best shape,” said Tripathi, who manages India’s top-performing corporate bond fund. “This is giving us the comfort to invest in quality non-AAA papers.”

       The ratio of upgrades relative to downgrades in credit ratings of Indian firms hit a decade high of 3-to-1 in the first half of the financial year, according to Crisil Ltd., the local unit of S&P Global Ratings. Tripathi expects the credit scores to improve further in the next 18-to-24 months as economic revival gains traction.