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Corporate bond yields softened in 2024-25, tracking the decline in government securities (G-sec) yields, according to the Reserve Bank of India's annual report released on Thursday.
The average monthly yield on AAA-rated 3-year bonds declined across all major borrower categories in March 2025 compared to a year ago. RBI said "The monthly average yield on AAA-rated 3-year bonds of public sector undertakings (PSUs), financial institutions (FIs) and banks; non-banking financial companies (NBFCs); and corporates fell". Yields fell by 15 basis points (bps) for public sector undertakings (PSUs), financial institutions (FIs), and banks; by 28 bps for non-banking financial companies (NBFCs); and by 33 bps for corporates. The secondary market saw increased activity, with the average daily turnover in corporate bonds rising to Rs 7,645 crore during 2024-25 from Rs 5,722 crore in the previous year. The primary market also witnessed growth. Issuances of listed corporate bonds on domestic stock exchanges increased during the year, along with a rise in funds raised through overseas markets. Private placements remained the dominant route for raising funds, accounting for 99.2 per cent of the total resources mobilised through the domestic corporate bond market. Foreign portfolio investors (FPIs) increased their investments in corporate bonds. However, the utilisation of approved FPI limits declined slightly to 15.8 per cent at the end of March 2025, compared to 16.2 per cent a year earlier. This decline came despite a rise in the absolute limit for FPI investments. The data also highlighted continued strength in India's corporate bond market, supported by lower yields and strong investor interest. (ANI)
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