Corporate bond issuances top Rs 17,000 crore as yields ease

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Companies tapping debt markets this week include public sector institutions like Nabard, REC and Sidbi.

The aggregate proposed issuance from issuers planning to raise debt this week is over Rs 17,000 crore. With the 10-year yield closing at 7.30% on Tuesday, after touching 7.50% last week, issuers are moving ahead before yields rise further, as markets have already priced in an eventual increase.

Companies tapping debt markets this week include public sector institutions like Nabard, REC and Sidbi, while private firms include Bajaj Housing Finance, Lloyds Metals & Energy, Hinduja Leyland Finance, JSW Pains, and Tata Capital Housing Finance.

Corporate debt issuances have seen significant growth as many companies seek to capitalize on favorable borrowing conditions. The aggregate debt proposed to be raised this week surpasses Rs 17,000 crore. Experts suggest that current bond yields below 7.30% may not remain stable for long. The outcome of upcoming US midterm elections may influence future market conditions significantly.

"There is a significant pile-up of corporate bond issuances, with issuers appearing to jump the queue to capitalise on the recent rally in bond prices," said Venkatakrishnan Srinivasan, founder and managing partner at Rockfort Fincap LLP, a debt advisory firm.

"However, the 10-year yield below 7.30% may not be sustainable unless crude oil prices soften further and global bond yields decline meaningfully," Srinivasan said.

Traders remain sceptical about how long the rally can last. Yields have fallen by around 20 basis points over the past two weeks, but further easing appears limited, and contingent on global factors beyond RBIs control.

"A lot would be contingent on the outcome of US midterm elections and its repercussions on the West Asia crisis. We expect benchmark yield to trade in the range of 7.25-7.35% in November, with risks tilted to the upside," said Dipanwita Mazumdar, economist, Bank of Baroda.

The US mid-term election results will be announced early on Wednesday morning.