Indian entities are taking advantage of benchmark 10-year yields dropping from 7.50% last week to close at 7.30% on Tuesday. State entities like Nabard, REC, and Sidbi are issuing debt alongside private corporations including Bajaj Housing Finance and JSW Paints. However, analysts emphasize that yields below 7.30% require lower global yields and softer crude oil prices to remain sustainable. With borrowing costs expected to range between 7.25% and 7.35% in November, market risks remain tilted toward higher future rates.
Key points
Further reductions in borrowing costs depend heavily on declines in global bond yields an…: Further reductions in borrowing costs depend heavily on declines in global bond yields and softer crude oil prices.
Economists anticipate the benchmark yield will trade in a narrow corridor between 7.25% a…: Economists anticipate the benchmark yield will trade in a narrow corridor between 7.25% and 7.35% throughout November.
Global geopolitical events including the U.S. midterm elections and West Asia crisis thre…: Global geopolitical events including the U.S. midterm elections and West Asia crisis threaten to push domestic yields higher.
Sources checked by our analysis pipeline: 1
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…
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