Corporates tap bond markets for record fundraise in FY2025
MUMBAI
:
Indian companies' fund raising through corporate bonds hit a high in fiscal year 2025, owing to the fall in yields and strong appetite.
According to data released by the Securities and Exchange Board of India (Sebi), Indian firms raised
₹
9.87 trillion through bond sales until March 2025, a 17% jump from the previous year.
'Corporate bond issuances touched a new high last year, driven by a combination of factors. Although the overall year-on-year growth in issuance volumes remained steady, major structural shifts were visible. Banks' infra bond issuances surged to a record level, while the absence of HDFC Ltd's regular bond issuances post its merger with HDFC Bank was notable," said Venkatakrishnan Srinivasan, founder and managing partner at debt advisory firm Rockfort Fincap.
While corporate bond issuances remained flat year on year, public sector entities and banks' issuances increased nearly 25%, contributing to the overall increase.
According to exchange data, banks collectively raised
₹
94,438 cr through infrastructure bonds in FY25, compared to
₹
51,1081 in FY24.
Banks collectively raised
₹
89,588 crore through infrastructure bonds in the first 11 months of FY25 against
₹
51,081 crore in the year-ago period.
Public sector banks (PSBs) accounted for 90% of the total infra bond issuances, up from 51% in the year-ago period.
Tight banking system liquidity also pushed corporates and NBFCs to tap bond markets increasingly, where funding was available at comparatively better rates than bank loans. Last year saw the banking system's liquidity turn from surplus in the first half to deficit in the second half.
The average liquidity deficit in the inter-bank market crossed
₹
3.3 trillion in January this year.
Yields on corporate bonds fell between 25 and 50 basis points last year, tracking government bond yields.
'For a larger part of FY2025, the corporate bond curve was inverted on account of tight liquidity conditions and strong demand in long-term corporate bonds from investors," said Ketan Parikh, head of fixed income at ICICI Prudential Life Insurance.
While AAA-rated companies dominated the issuance, AA-rated issuances jumped by 7% last year, according to stock exchange data.
'With the introduction of Online Bond Platform Providers (OBPP) platform and rise in interest amongst family offices, we saw a significant rise in issuance of AA-rated bonds and below. While this can be viewed as a good sign of broadening the credit spectrum, there is a need for the retail bond investor to know the risk which they carry with the various issuers and not get lured by only the returns," said Vinay Pai, head of fixed income at investment banking firm Equirus.
Fund managers expect this trend to continue in FY2026, with corporate bond issuances crossing
₹
11 trillion.
With the RBI having infused almost
₹
6 trillion of liquidity through various measures, including open market operations and FX swaps, and another
₹
2.5 to 3 trillion worth of dividends being paid by the RBI to the government, market participants are expecting liquidity to remain in surplus this year. RBI Governor Sanjeev Malhotra has also assured that the central bank will keep 1% of net demand and time liabilities (NDTL) as surplus liquidity.
'Last year, we had a significant amount of demand for long-tenor government securities from insurance companies, provident and pension funds. Now, as the interest rate cutting cycle plays out and we get deeper into the rate cut cycle, maybe in Q2 or Q3 of FY2026, we could see a shift from long-tenor government securities towards corporate bonds in the 5 to 10-year segment from a carry perspective and positioning for curve steepeners. This could lead to a compression in the currently elevated corporate bond spreads," added ICICI Pru Life's Parikh.
Market participants also say that companies will prefer to tap the bond market this year as well, since the bank lending rate has yet to come down to the extent that the RBI has cut rates. While the repo-linked lending rate has come down by 50 basis points (bps), the Marginal Cost of Funds-based Lending Rate for most banks is down by only 10 bps.
Corporate bond yields have fallen by 50-60 basis points to below 7%, especially in the 3-5 year segment.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Hindustan Times
20 minutes ago
- Hindustan Times
New Zealand reiterates commitment to FTA with India, seeks closer defence ties
New Delhi: New Zealand is committed to finalising a free trade agreement (FTA) with India and even areas of concern such as the dairy industry can be turned into opportunities to ensure food security, New Zealand's deputy prime minister Winston Peters said on Friday. Peters, who is also the foreign minister, said New Zealand is keen to work more closely on defence and security issues with India, which he described as a 'geopolitical giant' and an 'indispensable security actor' in the region. External affairs minister S Jaishankar and Peters took stock of bilateral ties at a meeting in New Delhi late on Thursday. Jaishankar said in a social media post that both sides agreed to collaborate closely for a rules-based, peaceful and stable Indo-Pacific in a 'more volatile and uncertain world'. He also thanked New Zealand for its support on the Pahalgam terror attack. Peters' two-day visit to India is a follow-up to New Zealand Prime Minister Christopher Luxon's trip to New Delhi in March, when the two sides finalised an agreement to bolster defence cooperation and announced the launch of negotiations on an FTA. Participating in an interaction organised by Ananta Centre on Friday, Peters declined to set a timeline for concluding the FTA but said the 'conversation is going [ahead] with real meaning' despite 'certain areas of concern' such as the dairy industry. He argued that New Zealand's expertise in the dairy industry could open new opportunities, especially to bolster India's food security. 'I understand the the dairy industry in India. But here's the rub. You'll need 35% more food in the next 35 years and our country, rather than being an opponent, can be a serious help to drive up your productivity in the dairy industry,' he said. While offering New Zealand's help to boost the dairy industry's productivity in one Indian state, Peters said collaboration in this field can lead to 'better breeding, better outcomes, better production'. 'The more we look at India, we see opportunity everywhere if we can get this [FTA] across the line. We're not in it to enrich ourselves, we're in it to enrich both peoples,' he said, pointing to opportunities in agriculture. Two-way trade in goods and services between India and New Zealand has increased from $1.67 billion in 2020 to $1.75 billion in 2023. Earlier this month, India clinched a trade deal with the UK and it is currently engaged in trade talks with the European Union, Oman and the US. Also Read:New Zealand PM in India to attend 10th Raisina Dialogue as chief guest; focus on trade, security Peters noted that India is New Zealand's 12th largest trade partner and said his country is determined to change that. 'Our strengths, from food and beverage products to agriculture, forestry, horticulture, education and tourism are world-class. Our innovation in areas like outer space and renewable energy will find a welcome partner in India,' he said. He also focused on New Zealand's plans to work more closely on defence and security. 'During a time of great uncertainty, instability and disorder, we have taken steps to work more closely on matters of defence and security with India,' he said. The recent defence cooperation arrangement will facilitate closer links between militaries of the two countries, which are currently part of Combined Task Force 150. This multinational naval force, based in Bahrain, is charged with protecting some of the busiest shipping lanes in the Indian Ocean and Gulf of Oman and countering terrorism and piracy. Also Read: 'If the terrorists are in Pakistan, we will hit them where they are': Jaishankar 'India's involvement in this mission as the deputy commander of the task force underscores the growing closeness of our defence ties. The task force has already had some serious real impact, disrupting the trade of $600 million worth of illegal drugs so far,' Peters said. 'With tensions rising in the Indo-Pacific, it's crucial for New Zealand to work hand in hand with India and other like-minded partners to ensure the region remains free and open, with all nations respecting the rules that underpin peace and stability.' Reiterating New Zealand's commitment to South and Southeast Asia, Peters said: 'Ultimately, there's plenty in our relationship to benefit both New Zealand and India. As we work more closely together on defence and security, on sharing technology and human capital, and cooperating economically, we can say to you that India can rely upon New Zealand's word and the actions that support them.'
India.com
25 minutes ago
- India.com
Gautam Adani hits jackpot as LIC invests Rs 50000000000 in this company of Adani, name is..
Masterstroke by Gautam Adani as Adani Group deploys India's first..., it is capable of... India's largest public sector insurer, LIC, has fully subscribed to a Rs 5,000-crore non-convertible debenture (NCD) issue of Adani Ports and Special Economic Zone, reported Economic Times. This move reflects Adani Ports' ongoing strategy to replace costly short-term loans with more affordable, long-term debt as part of its broader financial streamlining efforts. Issued on Thursday, the 15-year bond carries an annual interest rate of 7.75%. This makes it one of the longest-tenure domestic bonds raised by the Adani Group in recent months. According to a report by The Economic Times, LIC is the sole buyer of this bond. LIC already holds an 8.06% stake in Adani Ports. The funds raised from this bond will be used by the company for new investments, repaying existing debt, and other business needs. Gautam Adani's group is working to extend its loan repayment timelines and reduce borrowing costs. Due to strategic refinancing efforts, the group's average borrowing cost dropped to 7.92% in FY25, down from 9.02% in the previous year. As reported by The Economic Times, the head of fixed income at a domestic brokerage said, 'This deal shows LIC is taking large exposure to corporate bonds.' Backed by APSEZ's strong financials and a 'AAA/Stable' domestic credit rating, the issue locked in a competitive coupon rate of 7.75 per cent per cent, and was fully subscribed by LIC, the Adani Group company said in a are long-term financial instruments that companies issue to raise more money from investors. The debentures will be listed on the Adani Group company claimed that the NCD issue shows APSEZ's deep access to long-term capital from diversified sources at attractive pricing and significantly enhances APSEZ's debt maturity profile. It added that the transaction highlights APSEZ's access to domestic markets for its longest tenure issuance to date, and one of the longest in Indian capital markets proceeds will fund a proposed buyback of APSEZ's US Dollar bonds, pending board approval on May 31, 2025.
Time of India
25 minutes ago
- Time of India
IndiGo inks initial pact with BIAL to set up MRO facility
Domestic carrier IndiGo on Friday said it has inked an initial pact with Bangalore International Airport Ltd (BIAL) to set up a maintenance, repair and overhaul (MRO) facility at the Bangalore International Airport. Under the agreement, BIAL will allocate about 31 acres to IndiGo for development of MRO infrastructure to support the airline's expanding fleet, it said in a statement. The facility will be equipped to handle both narrow-body and wide-body aircraft, further strengthening IndiGo's maintenance capabilities and operational presence at the Bengaluru Airport. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Eran tan bonitos antes; míralos ahora; el número 10 te impactará. Boite A Scoop Undo "Developing broad IndiGo MRO capabilities marks a significant and very strategic step for IndiGo. Partnering with BIAL underlines our shared commitment to drive long-term growth of the aviation ecosystem in Bengaluru", IndiGo Chief Executive Officer Pieter Elbers said. Together with BIAL, IndiGo is further shaping the future of Indian aviation by focusing on innovation, growth and global connectivity that will define India's leadership in the skies, he added. Live Events "We see this collaboration as a pivotal step towards building a significant global presence for IndiGo, as well as for India," he added. "We have had a very successful, long-term relationship with IndiGo and this collaboration further strengthens our association with the airline. This is a strong validation of the growth potential of Bangalore Airport and the city as a premier aviation hub," BIAL MD and CEO Hari Marar said. We extend our sincere gratitude to the Government of Karnataka for their continued support in making this collaboration possible and enabling us to drive forward the next phase of aviation-led growth for the region, he said. The initial pact also outlines broader collaboration in areas, including network expansion, infrastructure development, and joint marketing initiatives. This partnership reflects the strategic intent of both organisations to enhance aviation infrastructure and position Bengaluru as a key hub for domestic and international operations for passenger and air cargo, as per the statement. With more than 400 aircraft in its fleet, a dedicated MRO facility will give a significant advantage in terms of aircraft availability, greater cost efficiencies and quicker turnaround benefiting the airline and its customers, IndiGo said. Further, the development of the MRO facility will help strengthen the aerospace and defence ecosystem in Karnataka, it added. IndiGo already has one MRO facility each in Delhi and Bengaluru.
