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Informist, Friday, Jun. 12, 2026

 

By Vaishali Tyagi

 

MUMBAI – A wave of corporate bond issuances is set to hit the primary market early next week as major public sector undertakings line up after yields on corporate bonds fell sharply, market participants said. Corporate bond yields fell as market sentiment got a boost from the Reserve Bank of India's measures announced on Jun. 5 to encourage foreign capital inflows, dealers said. Fall in yields on Indian government bonds and crude oil prices also helped pull corporate bond yields down.

 

State-owned entities are set to raise around INR 130 billion on Tuesday. Along with non-banking financial companies scheduled for Monday, total issuances announced on the electronic bidding platform so far have reached INR 37.05 billion, taking the combined pipeline to about INR 167.05 billion.

 

The RBI introduced two swap facilities Monday. The central bank introduced the US dollar-rupee swap facility for fresh Foreign Currency Non-Resident (Bank) deposits, mobilised for a minimum tenor of three years and maximum tenor of five years. It also introduced a forex swap facility for external commercial borrowings with maturities of three years or more and overseas foreign currency borrowings raised by authorised dealer category-I banks with a minimum maturity of three years.

 

Yields on National Bank for Agriculture and Rural Development bonds dropped sharply after Jun 5. The three-year bond yield fell 30 bps to 7.40% from 7.70-7.75%. Five-year bond yields slipped to 7.36-7.38% from 7.58-7.60%, while indicative yields on 10-year bonds eased to 7.40-7.50% from 7.75%. The 10-year benchmark gilt fell to 6.89% Friday, down 7 bps from 6.97% on Jun. 5, tracking the RBI's steps to boost inflows, lower crude oil prices, and optimism over US-Iran peace talks. The move spilled over to corporate bonds, dealer said. 

 

Market participants said many PSUs and NBFCs had delayed their borrowing plans for two to three weeks earlier, waiting for yields to ease. The RBI's latest measures to boost inflows have since brought yields down across the curve. With yields now lower, issuers are tapping the market to take advantage of cheaper funding, they said. "After the RBI's announcement on the rupee measures and the expectation of they (issuers) going to borrow through ECBs (external commercial borrowing)...levels have come down by 20-30 basis points across the curve," a fund manager at The Wealth Company said. "So, they have been postponing their borrowing for two-to-three weeks. Now, with levels coming down sharply, it gives them (issuers) a good opportunity to come and borrow money from market."

 

Mutual fund managers said that if inflation picks up and yields rise again, it makes sense for issuers to lock in lower rates now. "Even though they want to go for ECBs (external commercial borrowing), but domestically also, they want to borrow as much as possible which they are doing now." the fund manager quoted above said. 

 

Among the state-owned entities lined up for Tuesday, Small Industries Development Bank of India plans the largest raise at up to INR 60 billion through five-year bonds maturing Jun. 18, 2031. REC have plans to borrow up to INR 40 billion via bonds maturing Jul. 1, 2036, while Housing and Urban Development Corp. Ltd. plans to raise up to INR 30 billion through bonds maturing Jul. 18, 2029.

 

Market participants expect the SIDBI's Jun. 18, 2031 bond issue to price at 7.40-7.45%, while REC's Jul. 1, 2036 bond is likely to see yields around 7.50%. Views remain divided on HUDCO's Jul. 18, 2029 bond coupon, as some expect it at 7.18-7.20%, while others see it closer to 7.40%.

 

Market participants expect upcoming issuances to draw strong demand from investors at attractive levels, citing robust response to recent bonds from National Bank for Financing Infrastructure and Development and NABARD. Demand is coming from both domestic and foreign investors. "If you have seen the last few days, we had NABARD reissue, we had REC and NaBFID also today (Friday)... everyone (all mentioned issuers) got good levels," the fund manager said. 

 

NaBFID, raised a total of INR 50 billion through two bonds with different maturities, with both fully subscribed. NaBFID borrowed INR 25 billion through July 2029 bonds at a 7.37% coupon, while the remaining INR 25 billion was raised at 7.66% via 10-year bonds maturing in June 2036. Earlier in the week, NABARD raised INR 67.80 billion at a yield of 7.3442% through a reissue of its 7.44% July 2029 bond. REC raised INR 30 billion at a 7.38% coupon via bonds maturing Feb 28, 2029.  

 

On investor appetite, dealers said there is strong interest coming from all segments, with mutual funds, banks, insurance companies and pension funds all showing up to take part in primary market. Pension funds like SBI Pension Fund, Kotak Mahindra Pension Fund and Aditya Birla Sun Life Pension Management are also active. "There is demand also coming from foreign institutions, they are buying right now...insurance companies, banks...everyone is participating (in primary market)," a dealer at a big non-banking financial company said. 

 

Dealers expect the primary market issuance trend to continue until yields move higher again. If yields rise again due to higher supply, issuers may shift to global markets. For now, issuers will borrow domestically till the time rates are better, they said. End

 

Edited by Deepshikha Bhardwaj

 

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