After a muted September quarter, India’s corporate bond market is seeing a revival, with major borrowers lining up to raise funds as yields begin to soften following dovish signals from the Reserve Bank of India (RBI). Bharti Telecom Ltd and several other companies across sectors are preparing sizeable issuances in the coming days, merchant bankers told Mint.
Bharti Telecom plans to raise ₹15,000 crore through short-term bonds maturing in two and three years—one of the largest corporate bond issues so far this financial year. Barclays is said to be the arranger for the offering, which is expected to open next week. Proceeds will be used to refinance debt maturing in the coming months, according to bankers familiar with the plan.
In November 2024, the company had raised ₹11,150 crore through a similar short-term bond issue.
Another major name entering the market is real estate developer Signature Global India, which plans to raise ₹875 crore through bonds maturing on 15 January 2029, at a fixed coupon of 11%, as per the term sheet. The bond issue, rated A+ by CARE, will open on 14 October and be allotted on 16 October.
The company intends to use the proceeds to repay debt of its wholly owned subsidiary Signatureglobal Business Park Pvt. Ltd and to fund land acquisitions under sale deeds.
The renewed activity follows a sharp slowdown in corporate bond sales during the September quarter. Issuances plunged to ₹2 trillion from ₹3.44 trillion in the June quarter and ₹3.2 trillion a year earlier, according to data from Prime Database. Borrowers largely stayed away as yields rose amid global uncertainty and ambiguity around the RBI’s rate trajectory.
The yield on 10-year bonds issued by the National Bank for Agriculture and Rural Development (Nabard)—a key benchmark for the corporate debt market—climbed 18-20 basis points to 7.24% in the September quarter, tracking the 10-year government bond yield, which rose 20 bps to 6.50%.
On Friday, the 10-year government bond closed at 6.52%, while the 30-year bond was at 7.09%, according to data from the Clearing Corp. of India Ltd.
That trend, however, appears to be reversing. RBI governor Sanjay Malhotra recently said yields were expected to head lower, raising expectations of a rate cut in December. “While there is scope for more, we feel that it (10-year government bond) should head downwards and a number of measures have been contemplated in this regard, including how primary G-Sec auctions will be held, the tenor of these government offerings not only central government but also state government,” Malhotra said last week.
Since the start of October, yields on the 10-year benchmark 6.33%, 2035 government bond have fallen six basis points to 6.51%, tracking the Reserve Bank’s dovish tone. Corporate bond yields usually move in tandem with sovereign paper, giving issuers greater confidence to tap the market.
“The current macroeconomic conditions and the outlook has opened up policy space for further supporting growth,” Malhotra said during the monetary policy announcement on 1 October, remarks traders interpreted as a sign of more rate cuts ahead.
“The improving tone of the October monetary policy, which remained neutral but carried a dovish bias, along with several positive regulatory measures, has since improved market sentiment and revived expectations of stronger debt mobilisation in the months ahead, especially in the short- to medium-term corporate bond segment,” said Venkatakrishnan Srinivasan, bond market veteran and managing partner at Rockfort Fincap.
Other borrowers expected to hit the market next week include Aditya Birla Capital, Aditya Birla Housing, Afcons Infrastructure Finance, Kotak Mahindra Prime, SMFG India Home, and Cholamandalam Investment and Finance Company Ltd. Together, they are looking to raise around ₹3,500 crore through short-term papers.
Market participants expect fundraising activity to pick up further in the second half of the fiscal year as non-banking financial companies (NBFCs) gear up to finance credit growth.
“With the rationalisation of the goods and services tax, growth will spur for NBFCs in the second half of the current financial year, leading them to chalk out their fundraising plans through debt,” one banker said.
