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Informist, Wednesday, Aug. 5, 2026

 

By Meera Nair

 

MUMBAI – Fundraising through private placement of corporate bonds moderated in July after a sharp surge in June as issuers turned cautious amid uncertainty over the Reserve Bank of India's monetary policy decision and volatile global cues. Market participants said companies delayed large borrowings during the month, preferring to wait for greater clarity on the interest rate outlook, even as investor appetite for high-quality papers remained intact.

 

Companies raised INR 827.61 billion through 255 corporate bond issuances in July, sharply lower than INR 1.32 trillion through 324 issuances in June, according to data compiled by Informist.

 

"The market was in a wait-and-watch mode for most of the month," said Venkatakrishnan Srinivasan, managing partner at Rockfort Fincap. "There was uncertainty around the RBI policy and global developments, so several issuers preferred to postpone their borrowing plans rather than lock in funding immediately."

 

Unlike June, when falling yields spurred a rush of bond issuances, fundraising in July proceeded at a more measured pace as higher yields hit issuer appetite and participants reassessed the domestic interest rate trajectory.

 

The yield on the three-year National Bank for Agriculture and Rural Development bond was at 7.41-7.43% as of Jul. 30, up from 7.20-7.22% at the end of June. The yield on the five-year bond also rose to 7.36-7.38% from 7.23-7.27%, reflecting the hardening in benchmark yields during the month, while the yield on the 10-year NABARD bond rose to 7.45–7.50% from 7.38-7.42%.

 

Dealers said shorter- and medium-tenor bonds continued to dominate issuances during the month, reflecting issuers' preference to avoid locking in long-term borrowing costs until there is greater clarity on interest rates. Floating-rate issuances also remained relevant for borrowers seeking protection against future rate movements.

 

Despite the slowdown in overall volumes, issuances continued to be concentrated in highly rated borrowers, with large non-banking financial companies, housing finance companies and select public sector entities tapping the market.

 

SBI Capital was the top corporate bond arranger in July, helping mobilise INR 50.91 billion, according to data compiled by Informist. It was followed by HSBC, which arranged issuances worth around INR 46.22 billion and A.K. Capital also mobilised close to HSBC of around INR 46.15 billion. Axis Bank mobilised issuances worth INR 35.5 billion, while Trust Investment arranged issuances worth INR 19.03 billion. Other key arrangers included SMC Capital, Standard Chartered, HDFC Bank, and Darshaw & Co.

 

"The demand for quality papers has not disappeared," Srinivasan said. "Investors are willing to deploy money, but they are becoming increasingly selective about the credit profile and tenor."

 

Fundraising by non-banking financial companies eased to around INR 347.37 billion in July from over INR 621 billion in June, as issuers turned cautious amid uncertainty over the Reserve Bank of India's monetary policy outlook and global developments. Among non-banking financial companies, Muthoot Finance emerged as the biggest borrower, raising INR 55 billion, followed by Sundaram Finance, which raised INR 48 billion through multiple issuances.

 

Housing finance companies raised INR 56 billion, sharply lower than INR 132 billion in June, with Bajaj Housing Finance emerging as the largest housing finance issuer, raising INR 40 billion through two issuances during the month, followed by PNB Housing Finance, which raised INR 5 billion. Other sectors including infrastructure, construction, real estate, brokerage firms raised a total of nearly INR 142 billion.

 

AAA-rated companies raised INR 540.40 billion in July, accounting for over 43% of the total funds raised, while AA+ to AA-rated companies raised around INR 151.11 billion, or just over 18% of the total. In June, AAA-rated companies had accounted for over 55% of the total funds raised, while AA+ to AA-rated companies had accounted for nearly 14%.

 

"FCNR (B) (foreign currency non-resident account (banks)) is also not as big as what we are expecting. Definitely, there is an increase in ECB (external exchange borrowings) and foreign currency borrowings also but considering that US yield itself is so high and even if your hedging cost is going to give some relief whether it is really going to make big rate because with the kind of volatility and all-time weakness in rupee, I don't know whether the investors can really make money by investing in Indian bonds," he said.

 

On Jun. 5, RBI Governor Sanjay Malhotra introduced a facility to cover the full hedging costs for banks raising fresh three- to five-year foreign currency non-resident (bank) deposits till Sept. 30. He also announced a concessional foreign exchange swap facility till Sept. 30 to incentivise external commercial borrowings by public-sector undertakings. Banks raised $2.56 billion through overseas foreign currency borrowings during the same period, the RBI said.

 

State Bank of India was the only issuer from banks in the month of July and it raised INR 46.91 billion. "There are FCNR(B) flows into banks, their liquidity will be somewhat comfortable and are not expecting many bank issuances for the current financial year," he added, while most of the banks stayed away from markets.

 

RBI also rolled out swap facilities for public sector undertakings' external commercial borrowings and banks' offshore foreign currency borrowings, offering a concessional rate of 1.5% per annum. ICICI Bank has raised $1 billion through dollar bonds, while Tata Capital has raised $400 million and Canara Bank raised $200 million in the month of July.

 

Srinivasan said banks largely remained comfortable on the funding front and, therefore, refrained from aggressive bond issuances. Strong deposit mobilisation and adequate capital levels reduced the need for frequent market borrowings.

 

"The banking system is not under any funding stress," Srinivasan said. "Banks have enough liquidity and deposits, so there isn't much urgency for them to raise money through domestic bonds."

 

For the month of July, public sector undertakings raised INR 245.39 billion, sharply lower than the previous month. In June, the PSUs raised INR 298.04 billion.

 

National Bank for Agriculture and Rural Development and Small Industries Development Bank of India were the largest issuers among state-owned entities, raising INR 80 billion each. Other notable issuers included REC Ltd., NTPC Green Energy Ltd., and NIIF Infrastructure Finance Ltd.

 

"That yield is going up and down at least five to seven basis points every week. So not many people are comfortable because most of the AAA PSUs are compared to their peers' levels... one or two basis points is fine, but if it is beyond five to 10 basis points, then they will not touch the market. So a lot of people are slightly held back. And mainly, whichever PSUs or banks get concession from government, they just go and tap the foreign currency borrowings because of the swap arrangements," Srinivasan said on limited PSU issuances.

 

According to the press release by the Reserve Bank of India, public sector undertakings' external exchange borrowings are at INR 1.52 billion under its swap facility. India Infrastructure Finance Co. Ltd. has raised INR 1.30 billion through external exchange borrowings and other debt instruments as of Jul. 6.

 

Participants also said that the Reserve Bank of India's concessional swap facility continued to make overseas borrowings attractive for eligible issuers. Companies capable of accessing international markets continued to evaluate external commercial borrowings whenever all-in costs remained favourable relative to domestic funding.

 

"If overseas borrowing works out cheaper after hedging costs, companies will naturally look at that option," Srinivasan said.

 

ROAD AHEAD

Although overall fundraising slowed from June, dealers said investor demand in the primary market remained healthy, supported by adequate liquidity and continued participation from mutual funds and insurance companies. Market participants said that any sustained decline in yields could encourage borrowers who deferred issuances in July to return to the market.

 

Market participants expect corporate bond issuances to recover in August provided domestic yields remain stable and global volatility does not intensify. Several borrowers who postponed fundraising during July are expected to revisit the market once there is greater certainty on the interest-rate trajectory and geopolitical developments.

 

"If volatility subsides and yields remain around current levels, issuers who have been waiting are likely to come back," Srinivasan said. "The pipeline is healthy. The timing will depend largely on market conditions rather than funding requirements."

 

Dealers added that high-quality issuers are likely to continue dominating the primary market, while lower-rated borrowers may remain opportunistic until borrowing costs ease further.  End

 

Edited by Deepshikha Bhardwaj

 

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