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Informist, Friday, May 29, 2026

 

NEW DELHI – Corporate bond issuances remained robust overall in 2025-26 (Apr-Mar), supported by improved corporate balance sheets, and were a key driver of higher flows from non-bank sources along with foreign direct investment into India, the Reserve Bank of India said in its annual report for FY26 released Friday. However, primary issuances of listed corporate bonds on domestic stock exchanges declined to INR 9.1 trillion during FY26 from INR 9.9 trillion in the previous year, even as secondary market turnover rose sharply. The fall in primary issuances came alongside a moderation in mobilisation through overseas issuances.

 

Secondary market turnover in the corporate bond market increased to INR 7.1 trillion in FY26 from INR 6.2 trillion a year ago, reflecting improved trading activity despite a slowdown in fresh issuances. Private placements continued to dominate fundraising, accounting for 99% of total resources mobilised through the domestic corporate bond market. The average daily secondary market turnover in the corporate bond market increased to INR 71 billion during FY26 from INR 62 billion during the previous year. 

 

The spread on AAA-rated three-year corporate bond yields over government bond yields of corresponding maturity inched up during FY26 amid mixed corporate earnings results. The average yield on AAA-rated 5-year corporate bonds was at 7.53% as of Mar. 31, up from 7.43% from March 2025. "Corporate bond yields exhibited a hardening bias, accompanied by a broadening of spreads, amidst divergent corporate earnings performance," the annual report said. "The upward pressure on bond yields and risk premia amidst tariff and geopolitical tensions were limited by the monetary policy easing and OMO (open market operation) purchases by the Reserve Bank of India, as well as continued thrust on fiscal consolidation by the government."

 

Foreign portfolio investors' interest in corporate bonds rose during the year. However, the utilisation of approved limits by FPIs decreased to 15.0% as of Mar. 31 from 15.8% a year ago, "on account of an increase in absolute limits."

 

In a move to deepen the municipal bond market in the corporate debt financing, municipal bonds were notified as eligible collateral for repo transactions in consultation with the government of India on Nov. 11.  End

 

Reported by Vaishali Tyagi

Edited by  

 

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