Archive · 29 Jan 2026
Indian Corporate Bond Market Slows Amid High Yields
Indian companies have been borrowing less through corporate bonds in 2025.
Even though the Reserve Bank of India cut interest rates, bond yields stayed high, making loans from banks a more attractive option.
This shift happened because of higher yields on government bonds and a weaker rupee.
Companies are also waiting for better conditions to issue bonds.
The government's upcoming budget is expected to focus on infrastructure spending and keeping borrowing costs low.
This could help stabilize the bond market and support economic growth.
Corporate bond issuances in India declined by 6% year-on-year to ₹6.76 trillion in the first nine months of FY26.
Despite a 125-basis-point policy rate cut by the RBI, corporate bond yields remained high, making bank loans more attractive.
Yields on 10-year corporate bonds increased by 20-25 bps, while government bond yields rose by 40 bps in 2025.
Companies are preferring bank loans due to lower interest rates and better funding conditions.
The upcoming Union Budget is expected to focus on public capital expenditure and controlling borrowing costs to support economic growth.
- Who
- Indian companies and the Reserve Bank of India (RBI)
- What
- Decline in corporate bond issuances and shift towards bank loans due to high yields
- When
- First nine months of FY26 (April-December 2025)
- Where
- India
- Why
- High corporate bond yields, preference for bank loans, and global trade uncertainties
- Corporate Bond Issuance (FY26, 9 months)
- ₹6.76 trillion (6% decline YoY)
- Policy Rate Cut (2025)
- 125 basis points (cumulative)
- Corporate Bond Yields (10-year, Dec 2025)
- 7.24-7.26%
- Government Bond Yields (10-year, 2025)
- 6.64% (up 40 bps)
- Weighted Average Lending Rate (Nov 2025)
- 9.21%
- Debt-to-OPBDITA Ratio (March 2025)
- 2.1x
- Cash Reserves as % of Total Debt (2025)
- 46%
- Expected Fiscal Deficit Target (FY27)
- 4.3% of GDP
Sources
Titagarh, RVNL & IRCON: The “bull run” reality check ahead of budget 2026
Corporate bond issues slip 6% so far in 2025 as high yields turn borrowers cautious
Union Budget should boost public capex, contain borrowing costs
Budget day trading guide: Should you stay on the sidelines ahead of the mega event? Explained
Budget Picks 2026: Axis Securities lists Maruti Suzuki, UltraTech, Bharti Airtel among top stocks to buy ahead of Feb 1
Budget 2026 expectations: 5 key railway stocks to watch out for
