Insurers cut sovereign bond share to 59.7%, raise equity exposure to Rs 16.6 lakh crore

Despite the higher issuance, demand from traditional long-term investors such as insurance companies and pension funds has softened.

Within insurers’ portfolios, the share of G-Secs declined marginally to 39.5 percent from 40.3 percent, while SGS fell to 20.2 percent from 21.4 percent.

In contrast, exposure to corporate bonds rose to Rs 11.6 lakh crore from Rs 10.0 lakh crore, increasing their share in overall investments to 15.6 percent from 14.9 percent.

The broader corporate debt market continued to expand, with net outstanding bonds including both listed and unlisted, rising to Rs 57.5 lakh crore as of end-November 2025. However, secondary market turnover remained muted, underscoring persistent liquidity constraints in the market.

Issuance continued to be dominated by AAA-rated companies, though participation from firms rated below AA increased, pointing to a modest improvement in risk appetite.

Listed private placements remained the preferred fundraising route, driven largely by NBFCs, which continued to tap bond markets for funding, the report said.

More than 90 percent of bonds issued during the period carried fixed coupons, reflecting issuers’ preference for certainty in borrowing costs. Floating-rate instruments formed a smaller share and were largely linked to money market rates, government securities or equity-linked benchmarks.

In the listed corporate bond segment, insurance companies and mutual funds remained the largest providers of capital, while NBFCs and non-financial corporates were the primary borrowers. In the unlisted bond market, holdings were concentrated among non-financial corporates and newer investment vehicles such as alternative investment funds (AIFs).