Full Breakdown
India’s Corporate Bond Market Rallies on RBI’s Dollar-Attraction Measures
6/12/2026, 12:59:43 PM
Corporate Bond Issuance Surge After RBI Policy Shift
Companies, led by non-bank lenders, are raising more than 310 billion rupees ($3.24 bn) in up-to-five-year bonds this week, about one-third of the volume seen in April-May. State-run REC and NABARD each issued three-year bonds at a 7.34 % coupon, well below secondary-market rates.
Policy Shift to Attract Foreign Capital
The Reserve Bank of India announced a raft of measures to draw dollars, including higher subsidised deposits and incentives for banks and state-run firms to raise overseas funds. The move follows a period when corporate bond yields peaked at a seven-year high in May.
Key Issuers and Funding Scale
Non-bank lenders Bajaj Finance, Muthoot Finance, Bajaj Housing Finance and L&T Finance plan issuances of 85 bn, 27.5 bn, 20 bn and 15 bn rupees respectively, adding 147.5 bn rupees to the week’s total. Together, the four non-bank issuers contribute roughly half of the total corporate bond supply for the week. The RBI’s policy is expected to shift borrowing overseas, reducing domestic supply.
Yield and Cost Impact
LSEG data show AAA-rated corporate bond yields for up to five years fell 40-45 basis points, narrowing spreads over government bonds. Analysts note that continued overseas borrowing could sustain the rally in sub-five-year bonds by easing local funding pressure. The spread over government bonds narrowed, though the precise amount was not disclosed.
Official Statements
Ajay Marwaha, head of fixed income markets at Nuvama, said overseas borrowing could cut local debt supply and spark a rally in bonds below five years. Puneet Pal, head of fixed income at PGIM India Asset Management, described corporate bond funds as offering an attractive risk-reward profile for investors with horizons beyond 18 months. The RBI emphasized that the measures aim to attract foreign currency inflows and support market stability, and the package also raises subsidised deposit rates to further draw foreign currency.
Criticism & Opposition
The sources do not record any explicit criticism or opposition to the RBI’s actions or the surge in bond issuance.
Verbatim Quotes
- “The Reserve Bank of India on Friday announced a raft ofmeasuresaimed at drawing dollars into the country, including raising subsidised deposits and incentivising banks and state-run companies to raise funds overseas.” — Reserve Bank of India (press release)
- “A rise in overseas borrowings could reduce the need for local debt supply, leading to a rally in bonds below five years, said Ajay Marwaha, head of fixed income markets at global wealth firm Nuvama.” — Ajay Marwaha, Nuvama
- “Investors with a more than 18-month investment horizon are looking at corporate bond funds that present an attractive investment opportunity from a relative risk-reward perspective,” — Puneet Pal, PGIM India
- “Corporate bond yields had risen to their highest inseven yearsin May.” — Reuters report
Outlook
Market participants will monitor further RBI steps and the performance of the newly issued bonds, while the scale of overseas borrowing will shape future domestic debt supply and yield trends. Future policy adjustments will be closely watched for their impact on the domestic debt market.
