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Informist, Tuesday, Dec. 2, 2025

 

By Vaishali Tyagi

 

NEW DELHI – Fundraising through private placement of corporate bonds in November was broadly flat year-on-year, as lower issuances by banks offset higher supply from segments such as non-banking financial companies, housing financiers, construction, and manufacturing companies. On a monthly basis, fundraising through corporate bonds rose around 8%. 

 

According to data compiled by Informist, corporates raised INR 768.47 billion in November by issuing 203 bonds, broadly unchanged from INR 771 billion raised a year ago through 206 bonds. In October, corporates had placed 294 bonds worth INR 709.22 billion. Of the total corporate bond issuances in November, 58% were AAA-rated papers. Bonds rated AA, AA+, and AA- cumulatively raised just over INR 102 billion.

 

Market participants said the primary reason for the subdued on-year number was the absence of large-scale issuances of bonds by banks, particularly tier-I, tier-II, and infrastructure bonds, which typically constitute a major chunk of issuances. "Bank issuances have been the main culprit behind low bond issuances in November, with minimal activity seen in the market by them. If banks had raised funds as expected, the overall issuance numbers would have been significantly higher," said Venkatakrishnan Srinivasan, founder and managing partner at Rockfort Fincap. "If banks had come with even INR 80,000-90,000 crore (INR 800 billion to INR 900 billion) of supply between April and November – like last year – we would have already been 8–9% higher year-on-year."

 

In November, bank bond issuances totalled INR 90 billion, up from INR 77.5 billion in October. The largest issuance was Axis Bank's INR 50-billion 10-year bond, followed by ICICI Bank's INR 39.45-billion issuance of 15-year bonds. ESAF Small Finance Bank raised INR 1.5 billion through bonds maturing in August 2031.

 

"The slowdown is attributed to banks' cautious approach, with limited participation in longer-term bond issuances," a fund manager at a mutual fund said. "Instead, banks focused on shorter-term instruments like certificates of deposit due to uncertainty around interest rates. Banks had also issued six-month to one-year series, indicating a preference for shorter-term debt." Market participants said issuers avoided bonds at higher rates amid market uncertainty about the trajectory of policy rates, with some expecting another rate cut. Even though November saw some banks tapping the market after a long gap, the total quantum was still far lower than last year, the fund manager said.

 

Dealers attribute the decline in bond issuances to lower-rated entities that are facing challenges in the bond market, making bank credit a more attractive option. Such corporates, they said, were exploring alternative funding avenues.

 

Corporate bond issuances through private placements slowed in November as issuers adopted a wait-and-watch approach, anticipating a more favourable borrowing environment. Issuers were active early in the month as traders had been pricing in around a 50% chance of a 25-basis-point rate cut in December, but put their plans on hold after remarks by Reserve Bank of India Governor Sanjay Malhotra strengthened bets of a rate cut at the December policy meeting. 

 

In an interview with Hindi business news channel Zee Business on Nov. 24, Malhotra said recent macro indicators supported the scope for a rate cut. The yield on the benchmark 10-year 6.48%, 2035 bond fell below the psychologically crucial 6.50% level following his comments. 

 

Traders also awaited GDP data, which was released on the last working day of November. The data was expected to show growth of around 7%, in line with the RBI's forecast. Even a strong GDP reading was still not expected to rule out a rate cut, as RBI officials had highlighted challenges to growth from external demand conditions. As a result, issuers remained cautious, anticipating a more favourable borrowing environment. 

 

According to dealers, many state-owned entities and AAA-rated private issuers stayed away from the corporate debt market in November as they did not want to pay higher coupons. Market participants said issuers were adopting a wait-and-watch approach, anticipating a decline in yields after a rate cut.

 

The decline in corporate bond issuances partly stemmed from issuers stepping back from long-term bonds, as state government securities offered higher yields than 10-year AAA PSU corporate bonds. This, combined with muted demand from long-term investors who preferred the more attractive spreads on state development loans, reduced appetite for long-tenor corporate issuances. Insurers and pension funds, in particular, found state development loans more appealing, given the yield pick-up over government securities.

 

Issuers were also reluctant to lock in higher coupons on long-tenor corporate bonds. Instead, they focused on short-tenor issuances, where yields were still attractive and investor appetite, especially from mutual funds, remained strong.

 

Many expect higher supply of state bonds in the Jan–Mar quarter and are waiting for more favourable spreads before reinvesting in long-tenor corporate bonds. "SDL 10-year yields remained elevated at 7.40–7.45% during July–September, making long-term borrowing through corporate bonds unattractive, and this impact carried into October–November," Srinivasan of Rockfort Fincap said. "Several issuers deferred their fundraising plans, anticipating higher yields. As a result, some preferred short-term bonds, which supported overall issuance volumes but constrained year-on-year growth."

 

The domestic primary market saw a decline as corporates preferred bank loans and external commercial borrowings over domestic bonds. "External commercial borrowing is an attractive option for corporates, especially when domestic rates are high and it is a matter of where they are getting the better deal," Killol Pandya, head of fixed income at JM Financial Mutual Fund, said. "With foreign investors adjusting to currency depreciation, corporates are taking advantage of lower rates abroad, making ECBs a rising trend in corporate fundraising."

 

Fundraising by public sector companies rose significantly to INR 163.23 billion in November from INR 19.27 billion in October. Among them, Small Industries Development Bank of India was the largest issuer, raising INR 59.35 billion in November through bonds maturing in January 2029 at 6.74%. Another major issuer was the National Bank for Financing Infrastructure and Development, which raised INR 41.20 billion through two bonds maturing in five and 15 years. Other key issuers included Rural Electrification Corp., Housing and Urban Development Corp., and Power Finance Corp. 

 

The corporate bond market witnessed a surprise towards the end of November as two major regular issuers withdrew their planned offerings on a day of heavy supply, disappointing investors who were prepared to deploy funds at higher coupons. Both National Bank for Agriculture and Rural Development and Power Finance Corp. pulled back their issues totalling INR 100 billion.

 

Fundraising by non-banking finance companies amounted to about INR 371.66 billion in November, lower than INR 578.61 billion in October. Fundraising by housing finance companies declined nearly 25% on month to INR 16.25 billion. In November, Nashik Municipal Corp. tapped the market, raising INR 2 billion through two bonds. Other issuers included manufacturing companies, which raised over INR 55 billion, and construction and infrastruture finance companies, which raised around INR 38 billion through bond issuances.

 

Axis Bank was the top corporate bond arranger in November, mobilising INR 70.50 billion. It was followed closely by ICICI Bank with INR 20 billion. Other key arrangers included HDFC Bank, Tipsons, Trust Investment Advisors, Tipsons Financial Services, YES Bank, and SBI Capital Markets, according to publicably available data. 

 

Looking ahead, market experts expect a surge in corporate bond issuances in December and January, but only if yields come down after the December monetary policy review. While uncertainty prevails in the corporate debt market for now, market participants expect a stronger supply pipeline post the policy review and into early 2026 (Jan-Mar), as issuers return with long-term papers, supported by improved risk appetite and potential softening of yields. Even without a rate cut, government bond yields could move lower if supported by foreign flows, stability in the rupee, and global disinflation, which will bring corporate bond yields lower.  End

 

Edited by Avishek Dutta

 

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