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Informist, Wednesday, Feb. 4, 2026

 

By J. Navya Sruthi and Vaishali Tyagi

 

MUMBAI/NEW DELHI - Corporate bond issuances in January hit a three-year low as issuers stayed away from the market due to a surge in yields, market participants said. Yields on corporate bonds rose across maturities in January and the active five-year maturity saw yields rise by 30 basis points. This affected issuer appetite and dragged down corporate bond issuances sharply in January.

 

Companies raised INR 675.76 billion in January through 272 bond issuances, down almost 15% from the INR 789.5 billion raised in the same month a year ago through 210 issues, according to data compiled by Informist. On a sequential basis, fundraising through corporate bonds fell 27% in January. More than a third of the total amount -- nearly INR 241 billion -- was raised by AAA-rated companies.

 

Yields on corporate bonds were significantly higher in January due to continuous selling and higher supply, dealers from banks and asset management companies said. The yield on the three-year National Bank for Agriculture and Rural Development bond rose 28 basis points to 7.20% from 6.92?cember. Similarly, the yield on the five-year NABARD benchmark bond was up 30 bps in January at 7.35% from 7.05% in December and that on 10-year up 16 bps at 7.42% in January from 7.26%.

 

Experts and market participants said most companies were borrowing from banks to meet their funding requirements due to higher yields in the primary market. "Banks have become better lenders to most non-AAA issuers," said Dhawal Dalal, president and chief investment officer for fixed income at Edelweiss Asset Management. "They are turning towards banks amid higher primary yields. As a result, primary corporate bonds supply is a bit lower."

 

Loans given by commercial banks rose over 13% on year to INR 201.32 trillion as on Jan. 15, according to latest data from the Reserve Bank of India's Weekly Statistical Supplement. The weighted average lending rate on one-year fresh rupee loans of scheduled commercial banks fell 43 bps month on month to 8.28% in December.

 

Despite rising credit growth and deposit growth that is lower than credit growth, banks chose not to raise money from the corporate debt market. There was only one issuance by a small finance bank in January. ESAF Small Finance Bank raised INR 1.5 billion through six-year, February 2032 bonds. Banks had issued bonds worth INR 170 billion in December.

 

"Banks have tapped less than 50% in the bond market this year compared to last year," Venkatakrishnan Srinivasan, managing partner at Rockfort Fincap, said. "With good liquidity from the RBI, banks have not tapped the bond market, also because yields have risen."

 

Since mid-December, the RBI has conducted 25 short-term variable rate repo auctions through which it has infused over INR 13 trillion of gross transient liquidity into the banking system. Along with these temporary liquidity operations, the central bank has also infused INR 3.5 trillion through open market operations so far since December and around INR 1.5 trillion through two dollar-rupee buy-sell swap auctions. Other than these, measures the central bank has also conducted a two 90-day VRR auctions Friday through which it infused INR 1.37 trillion of temporary liquidity.

 

Apart from relying on these liquidity injections by the RBI, most banks have raised funds from the short-term debt market though not from the bond market. Banks' deposits, which were INR 245 trillion as on Jan. 15, have not grown as much as credit and this has pushed the credit-deposit ratio of banks to a high of 82%. The ideal range for the ratio is 76–80% for Indian banks and a ratio exceeding 80?n strain liquidity, according to a research report by State Bank of India.

 

There were 33 certificates of deposit issuances by banks in January, down from 52 in December. Banks raised INR 722.5 billion through certificates of deposit last month, slightly down from INR 732 billion in December.

 

SECTOR-WISE FUNDRAISING

Fundraising by public sector companies fell almost 17% to INR 143.64 billion in January. Among these, NABARD was the largest issuer. It raised INR 68.64 billion through bonds maturing in February 2029. The company issued three-year one-month bonds in January at 7.27%.

 

NABARD had scrapped the same bond issue in December as investors had demanded a higher coupon. According to the bid books accessed by Informist, for the December issue NABARD had received 84 bids totalling INR 124.60 billion, with coupons ranging from 6.84% to 7.12%. The company had expected the coupon to be in the range of 6.70-6.75%.

 

Another major issuer, the Small Industries Development Bank of India, raised INR 60 billion through three-year one-month bonds maturing on Feb. 9, 2029 at 7.04%.

 

Fundraising by non-banking financial companies rose 28% to INR 205 billion in January from INR 159.56 billion in December. Other companies, including real estate, manufacturing, and power companies issued bonds worth INR 316.80 billion in January, up 14% from INR 276.73 billion in December, while insurance companies and housing companies barely participated in the debt market in January.

 

Interestingly, issuances of municipal bonds also rose in January. In fact, municipal bond issuances were the highest in January so far in 2025-26 (Apr-Mar). The Greater Chennai Municipal Corp., the Tiruchirappalli City Municipal Corp., the Tiruppur City Municipal Corp., and the Coimbatore City Municipal Corp. collectively raised INR 5.78 billion by issuing bonds. There were hardly any municipal bond issuances during the first nine months of the current financial year.

 

ICICI Bank was the top corporate bond arranger in January, according to data compiled by Informist. It mobilised over INR 82 billion. It was followed by Barclays Bank PLC, which arranged bond issuances over INR 40 billion. Other key arrangers included A.K. Capital, DBS Bank, and Trust Investment Advisors Pvt. Ltd., according to publicly available data.  End

 

Edited by Ashish Shirke

 

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