Overseas bond issuances slump to decade low in 2025 amid global volatility

Export-Import Bank of India, Tata Capital, IIFL Finance, Varanasi Aurangabad NH-2 Tollway, are the top issuers so far in 2025.

Issuances of overseas bonds by Indian banks and companies fell to over decade low so far in 2025 due to mix of factors such as global market volatility, higher currency hedging costs and more competitive domestic funding conditions following the Reserve Bank of India’s (RBI) pivot towards rate cuts.

Indian companies and banks have raised Rs 21,779 crore so far this year. If this trend prevails for the rest of the year, 2025 could end as the year with lowest overseas bond issuances in more than a decade, according to Prime Database. In comparison, overseas capital raising through bonds stood at Rs 71,291 crore in 2024, though much lower than a record Rs 1.27 lakh crore issuances in 2019.

Export-Import Bank of India, Tata Capital, IIFL Finance, Varanasi Aurangabad NH-2 Tollway, are the top issuers so far in 2025.

EXIM raised Rs 8,644 crore through overseas bonds, Tata Capital raised Rs 3.461 crore, IIFL Finance raised Rs 3.678 crore, and Varanasi Aurangabad NH-2 Tollway raised Rs 2,755 crore, data showed.

“Overseas bond issuances by Indian corporates in 2025 have slumped to their lowest level in over a decade. This muted activity comes despite the fact that India’s sovereign rating was recently upgraded. Global bond markets remain volatile, with investors demanding higher spreads for emerging markets amid geopolitical uncertainties and currency risks,” said Venkatakrishnan Srinivasan, founder and managing partner at Rockfort Fincap LLP.

Experts said that Indian issuers are finding it harder to access international bond markets as investors demand higher spreads on all the emerging market debt amid geopolitical tensions and currency risks.

Domestically, the RBI’s rate cut cycle making onshore or domestic borrowing relatively more attractive after a 100 basis points reduction in the benchmark lending rate. At the same time, currency hedging costs have dulled the appeal of dollar bonds, particularly for companies without natural dollar revenues, erasing much of the cost advantage of overseas markets.

That said, while the overseas bond activity has been muted so far as a broader trend, non-banking financial companies (NBFCs) have increased borrowings via syndicated foreign currency loans. Cheaper offshore loan pricing and stronger global lender appetite for top-rated Indian names have driven this shift. “The sharp uptick in offshore loans reflects lenders’ comfort with India’s fundamentals, even as the bond market remains subdued,” Srinivasan noted.

Money market experts believe that overseas bond markets could regain momentum if global conditions stabilise and emerging market spreads narrow. If domestic yields harden again, some high-quality corporates may revisit offshore markets to arbitrage costs.

Until then, overseas fundraising will likely stay subdued, with Indian issuers leaning more on domestic money markets and offshore syndicated loans., where the rates are better compared to overseas bonds and Indian banks loans.