Corporate Debt Funding Hit by Rising Yields and Market Shifts in FY26

India's Corporate Bond Fundraising Hits Roadblock

Mumbai - The financial year that ended on March was expected to be another record-breaking year for India's corporate bond fundraising. However, the debt market lost momentum following a sharp rise in yields, and a shift in supply and demand dynamics.

The sharp rise in yields was a major contributor to the slowdown in corporate bond fundraising. Yields on government securities rose from 6.5% at the beginning of the financial year to 7.3% by the end of March, making borrowing more expensive for companies. This shift in interest rates had a ripple effect on the entire debt market, causing a significant decline in demand for corporate bonds.

Despite the initial optimism, the corporate bond market failed to gain traction in the second half of the financial year. The total amount of corporate bonds issued in the second half of the year was ₹3.5 trillion, which was lower than the ₹4.2 trillion issued in the first half. This decline in fundraising activity was a major setback for companies that were counting on the debt market to raise capital for their growth plans.

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As a result, the total amount of corporate bonds issued in the financial year was ₹6.5 trillion, which was lower than the ₹7.2 trillion issued in the previous financial year. The decline in corporate bond fundraising activity has raised concerns about the impact on the country's economic growth prospects.

The slowdown in corporate bond fundraising is a worrying trend for the Indian economy, which has been showing signs of slowing down in recent quarters. The government and regulators will need to take steps to address the issues facing the debt market and restore investor confidence in the corporate bond market.