Indian corporates and financial institutions raised almost the same amount through the domestic bond market in calendar year 2025 as they did a year ago, even as the Reserve Bank of India (RBI) delivered aggressive rate cuts of 125 basis points (Bps).
According to Prime Database, corporate bond issuances stood at Rs 10.84 lakh crore in 2025, marginally lower than Rs 10.93 lakh crore raised in 2024. The near-flat trend highlights how the benefits of lower policy rates were offset by rising government bond yields and shifting investor preferences.
The RBI cumulatively cut the repo rate by 125 bps during the year, kicking off a rate-cut cycle that initially made bond market borrowing cheaper. However, yields on government securities hardened due to a mix of domestic and global factors, limiting the transmission of rate cuts to the corporate bond market.
“While corporate bond issuance saw healthy demand in the first half of the year due to falling yields reducing borrowing costs, rising interest rates in Q3 forced issuers to significantly cut back their planned issuances,” said Umesh Kumar Tulsyan, Managing Director at Sovereign Global Markets.
Issuance momentum slowed sharply in the second half. Corporates raised around Rs 3.12 lakh crore during July–September 2024, but this fell to about Rs 2.08 lakh crore in the same period of 2025. Tulsyan said continued high borrowing costs are likely to keep issuer appetite subdued in the near term as well.
Corporate Bond Issuance
Top issuers dominated by PSU lenders
Public sector financial institutions continued to dominate the bond market in 2025. The top five issuers during the year were National Bank for Agriculture & Rural Development (NABARD) raising Rs 65,465 crore, Power Finance Corporation (PFC) raising Rs 49,101 crore, REC Ltd raising Rs 40,399.5 crore, Bajaj Finance Ltd raising Rs 31,207.9 crore, and Indian Railway Finance Corporation (IRFC) raising Rs 28,761.65 crore, data showed.
Top five issuers in 2025
Despite their dominance, even large public sector issuers turned cautious as yields hardened, particularly at the shorter end of the curve.
Third time in a row, PFC on December 23 have withdrawn their bond issuances after the investors demand higher yields on their bonds following a surge yields on government securities.
Yields track G-secs, investor appetite weakens
Corporate bond yields broadly mirrored the movement in government securities during 2025. Yields softened in the first half of the year but reversed course later, dampening investor demand.
“Reduction in spreads between corporate bonds and government securities have also aided investors opting for G-secs, thereby reducing appetite for corporate bonds,” Tulsyan said.
He added that issuers such as NABARD, PFC and SIDBI backed out of planned issuances at the last moment due to persistently higher yields.
2026 outlook hinges on liquidity, rate transmission
Looking ahead, market participants say the trajectory of corporate bond issuances in 2026 will depend largely on effective transmission of RBI rate cuts and the availability of system liquidity.
The RBI’s recent announcement of open market operations (OMOs) worth Rs 2 lakh crore has been welcomed by the market and could provide some relief to interest rates.
“If markets improve from here, we may see an uptick in corporate bond issuance in the next six months,” Tulsyan said.
Beyond that, factors such as RBI’s GDP growth and inflation targets, along with future policy actions, will determine the medium-term outlook for corporate bond fundraising in India.
"Markets will track global Fed path and U.S. yields, Bloomberg index-related inclusion and FII inflows, impact of trade tariffs on corporate margins, domestic fiscal arithmetic and gross government borrowing, plus crude and inflation risks, all of which can reprice term premium and credit spreads," said Balasubramanian R Head Of Treasury at Dhanlaxmi Bank.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
Find the best of Al News in one place, specially curated for you every weekend.
Stay on top of the latest tech trends and biggest startup news.
