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Informist, Monday, May 4, 2026

 

By J. Navya Sruthi

 

MUMBAI – Corporate bond issuances continued to fall year-on-year in April as companies largely stayed away from the market due to higher yields on corporate bonds on the back of firm crude prices. Corporate bond issuances also fell on a monthly basis as most companies were still drawing up their borrowing plans for the financial year, market participants said.

 

Companies raised INR 388 billion through 189 bond issuances in April, down over 62% from the INR 1.03 trillion raised a year ago through 213 issues, according to data compiled by Informist. Fundraising through corporate bonds fell by nearly 61% from INR 990 billion a month earlier. 

 

"The corporate bond supply has declined in April because generally they tend to pick up only from June onwards," a senior fund manager at a domestic brokerage said. "So, in the month of April, we have seen only NABARD (National Bank for Agriculture and Rural Development) or SIDBI (Small Industries Development Bank of India) borrowing INR 3,000-4,000 crores each (INR 30 billion to INR 40 billion). But the rest of the primary supply was very subdued," the fund manager said. 

Yields remained firm in April, though they fell by about 10 basis points after the US and Iran agreed to a ceasefire. Besides the ceasefire in West Asia, ample liquidity conditions also helped to moderate yields. In fact, the surplus liquidity in the banking system rose to INR 5.54 trillion in the first fortnight of April, the highest since May 4, 2022. However, yields rose in the second half of the month as crude oil prices surged amid rising tensions between the US and Iran.   

 

The yield on the three-year National Bank for Agriculture and Rural Development bond was at 7.63% as of Apr. 30, little changed from 7.64% a month earlier but sharply up from 7.40% in the middle of April after the ceasefire. The yields on the five-year and 10-year NABARD bonds at the end of April were steady from the previous month at 7.70% and 7.73%, respectively.

 

AAA-rated companies raised INR 149 billion in April, accounting for over 38% of the total, while AA+ to AA- rated companies raised around INR 121 billion, or over 31% of the total. In March, AA+ to AA- rated companies accounted for 29% of the total funds raised, while AAA-rated companies accounted for 53%.

 

State-owned companies NABARD and SIDBI were the top issuers in April, though both companies raised lower than their notified amounts due to higher yields. However, the data provided by the National Securities Depository doesn't include INR 42.50 billion raised by NABARD through reissuance.

 

Excluding NABARD, public sector companies raised INR 52 billion in April, sharply down from INR 257 billion in March. SIDBI raised INR 30 billion at 7.61% through three-year four-month bonds maturing on Aug. 29, 2029. SIDBI had planned to raise up to INR 60 billion, with a base size of INR 20 billion and greenshoe option of INR 40 billion, while NABARD had planned to raise up to INR 70 billion, with a base size of INR 20 billion and greenshoe of INR 50 billion, through the reissue of the bond maturing on Jul. 17, 2029. 

 

The second-largest issuer was NIIF Infrastructure Finance, which raised INR 10 billion at 7.88% through bonds maturing on Aug. 28, 2031. REC and Power Finance Corp. had raised INR 6 billion and INR 5 billion, respectively, through five-year bonds. 

 

In addition to these state-owned companies, non-banking financial companies also raised funds through corporate bonds in April, while most other companies and banks stayed away due to higher yields. Fundraising by non-banking financial companies rose by 5% on month to INR 223 billion in April. Others, including infrastructure, green energy, and technology companies, issued bonds worth around INR 62 billion in April.  

    

Trust Investments was the top corporate bond arranger in April, helping mobilise over INR 51 billion, according to data compiled by Informist. It was followed by Axis Bank, which arranged issuances worth INR 10 billion. Other key arrangers included SMC Capitals, ICICI Bank, HSBC, and JP Morgan India.

 

ROAD AHEAD

Going ahead, market participants expect fundraising to pick up in May and June. Dealers and market participants said companies may raise funds before yields rise, as the chances of further rate cuts are now completely ruled out. With the sharp rise in crude oil and gas prices, many market participants expect the next rate action by the Reserve Bank of India's Monetary Policy Committee to be a hike.

 

With firm energy prices and the possibility of an El Nio affecting the southwest monsoon, many expect inflation in India to rise sharply, especially if the government allows oil marketing companies to raise retail prices.

 

"Now everybody clearly knows that the levels are not going to come down, so on that basis, the market is currently looking at a three-year paper," Venkatakrishnan Srinivasan, managing partner at Rockfort Fincap, said. "Longer-term yields can go further (high) because everyone knows that the interest rate is going to go up. So as of today, people are not willing to issue a longer-term paper," he said.

 

Dealers said if the conflict in West Asia continues, then yields are likely to rise further due to elevated energy prices, which will push up inflation. Companies that need funds are likely to issue bonds in May and June before economic conditions worsen, a senior dealer at a private bank said.

 

Companies, including oil marketing companies, are likely to raise funds primarily by issuing bonds with maturities of up to five years, Srinivasan said. Yields are likely to rise from above current levels due to a likely rate hike by the RBI. "So I would advise issues to come now itself rather than later," Srinivasan said.

 

"After SIDBI and NABARD (raised funds), NaBFID (National Bank for Financing Infrastructure and Development) might join them," a senior treasury official at another private sector bank said. "Most issuers think it is better to raise funds now, as we are expecting a rate hike in Q3 or Q4 (Oct-Dec or Jan-Mar) this year. We may see more issuances in May and June before rates rise further."  End

 

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Edited by Saji George Titus

 

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