On Bond Street, falling yields spur a Rs 17,000-crore fundraise

At least eight institutions raised a combined ₹17,060 crore through bond issuances on Friday as falling benchmark yields made corporate debt financing more attractive.

Yields on the benchmark 10-year government bond have declined 28 basis points over the past month, lowering borrowing costs and encouraging issuers to tap the debt market, market participants said. One basis point is a hundredth of a percentage point.

"There has been a rebound in issuances in the past month as market sentiments turned favourable after the central bank announced the ECB and FCNR(B) measures," said Venkatakrishnan Srinivasan, managing partner, Rockfort Fincap, a debt advisory firm. "Government bond yields are also softening because there is an expectation that Indian debt will be added to the Bloomberg Global Aggregate Index."


The bulk of the money was raised in the three-year tenure window.

Among these, National Bank for Agriculture and Rural Development (Nabard) got the lowest rate of 7.16% for ₹8,000 crore. Aditya Birla Capital and Bajaj Finance raised money in the 10-year bucket.

Borrowing costs declined as global crude prices fell after the US-Iran peace deal and the Reserve Bank of India eased foreign currency funding for public sector companies in June. The benchmark 10-year government bond yield has declined to 6.72% from a peak of 7.13% late May. "I expect these favourable conditions to continue into the second quarter. What happens after September will have to be seen, because that is when the central bank schemes end," Srinivasan said.

The special RBI forex swap window to boost foreign currency inflows is valid for overseas funds mobilised until September 30.