Indian cos bond less with dollar in ’25 as price advantage recedes

Dollar bond issuance from India fell around 35% in 2025 from last year, as companies increasingly turned to the domestic rupee bond market to refinance debt, driven by cost considerations and volatile global rates, dealers said.

Issuances fell to around $8 billion from $12 billion in 2024, according to debt market sources.



The pullback was largely due to lower price advantage in the overseas markets and abundant liquidity locally, which enabled higher-rated companies to refinance upcoming maturities more efficiently through rupee-denominated bonds.


"Elevated and volatile US Treasury yields made USD funding less attractive, while deep domestic liquidity allowed high-quality issuers to refinance more efficiently in the rupee market," said Shobhit Bahl, head of financing for India at Barclays. "From an investor perspective, exposure to India was maintained through onshore bonds and secondary USD markets rather than new primary issuance."


Several large infrastructure, airport and renewable energy groups, such as Vedanta and GMR, opted for onshore issuance during the year, taking advantage of strong domestic demand from banks, mutual funds and insurers. Issuers were also able to secure longer tenors and tighter spreads in the rupee market than what was available offshore, dealers said.

Issuances to rebound in 2026


Bankers expect offshore issuance to recover in 2026, with some of them projecting it to top $10 billion, aided by proposed reforms to India's external commercial borrowing (ECB) framework which includes moving toward more market-determined pricing from the current ECB ceiling of 500 basis points over the benchmark. The rate cap is one of the main factors restricting issuers from tapping the dollar bond market under the ECB route.


Bahl said with higher maturities in 2026 and expectations of US central bank easing, offshore borrowing conditions should gradually improve.


"A narrowing onshore-offshore cost differential, lower rate volatility and tighter credit spreads would be key to a more meaningful return to the dollar bond market," he said.