Top companies, PSUs set to issue over Rs 45,000 crore bonds in April

A host of Indian corporates and public sector undertakings are taking advantage of the surplus liquidity in the market by stocking up on cash and issuing bonds. Despite the lockdown, Indian issuers have raised over Rs 30,000 crore — the highest ever — by selling short-term to medium-term bonds. Given the spate of issuances in the pipeline, the total bond collection could go up to Rs 45,000 crore by the end of the month.

Following the Covid-19 outbreak, the RBI has pumped in a significant amount of money, leaving banks with surplus liquidity of nearly Rs 7 lakh crore. Despite this, banks continue to demand a spread of nearly 3% over the repo rate on medium-term bonds by top-rated issuers. As a result, the cost of borrowing for corporates has not come down in line with the 75-basis-point (100bps = 1 percentage point) reduction in the policy rate in March 2020.

The issuers include Tata Group companies, L&T, Reliance, HDFC, M&M and a host of public sector finance companies. A few NBFCs like Sundaram, Cholamandalam and Hero Fincorp have also planned bond issues to take advantage of the special line provided by the RBI for banks to support finance companies.


For bankers, investing in a bond that’s rated triple-A is an attractive proposition. The risks are relatively lower and they can earn a decent spread, Also, given the lockdown, there is no growth in personal loans — the key driver of credit last year. Bankers say that corporates are raising funds, despite a relatively high spread, as part of their preparation for an extended lockdown.