In the period of April-June, corporate bond issuances dropped by 36% compared to the previous year due to uncertainty surrounding the election outcome and the Union Budget, as well as the absence of HDFC Ltd. According to Prime Database, corporate bond issuances in the first quarter of the current financial year totaled Rs 1.88 trillion, down from Rs 2.95 trillion in the same period of the previous year.
HDFC had been a major player in the bond market until its merger with HDFC Bank in July 2023, raising Rs 46,062 crore in the April-June period of FY23. This heavy borrowing had a significant impact on the market, creating momentum that carried over into subsequent months.
Various factors contributed to the subdued bond issuances in the current financial year, including the Lok Sabha elections, anticipated rate cuts, and India’s inclusion in the JP Morgan Bond Index. Additionally, companies like Delhi International Airport, L&T, Dabur, Tata Power, Century Textiles, and Torrent Power did not issue bonds in Q1 of the current financial year, leading to a drop in private sector bond issuances.
During this quarter, REC Ltd led the mobilisation chart with Rs 16,558 crore raised, followed by Bajaj Finance, National Housing Bank, State Bank of India, and Nabard. Infrastructure bond issuances by banks and major issuers are expected to increase in the coming months, which could help stabilize the market and meet the demand from investors seeking high-quality, long-term bonds. SBI has already raised Rs 20,000 crore through infrastructure bonds, with Canara Bank also planning to raise Rs 10,000 crore through similar bonds.