1 month ago
Bond issuances slow amid geopolitical uncertainty and market volatility
Corporate bond issuers are delaying their plans to issue bonds because the market is very unstable.
This instability is caused by ongoing tensions in West Asia, which affect oil prices and, in turn, bond yields.
In June, many companies issued bonds to take advantage of lower yields, but now they are waiting for the market to calm down.
Experts have different opinions on when this will happen.
Some think the market will stabilize soon, while others believe the volatility will continue.
The Reserve Bank of India's measures are expected to support yields, but for now, the uncertainty is keeping bond issuances low.
Corporate bond issuances have slowed due to geopolitical uncertainty and market volatility.
Listed issuances in July were Rs 58,781 crore, down from Rs 98,995 crore in June.
Oil price fluctuations and geopolitical tensions have made it difficult to establish pricing benchmarks.
The yield on the 10-year AAA-rated bond rose to 7.55% before easing to around 7.40%.
Market participants expect a revival in issuances once conditions stabilize and geopolitical tensions ease.
- Who
- Corporate bond issuers and investors
- What
- Deferral of bond issuances due to market volatility and geopolitical uncertainty
- Where
- Global financial markets, with a focus on India
- When
- July 2024
- Why
- Heightened market volatility and geopolitical tensions in West Asia
Optimistic View
Pessimistic View
Market Stability
Optimistic View
Market conditions will stabilize soon, leading to a revival in corporate bond issuances.
Pessimistic View
High volatility and geopolitical tensions will persist, keeping bond issuances low.
Yield Trends
Optimistic View
Yields will decline as the Reserve Bank of India's measures support the market.
Pessimistic View
Yields will remain volatile and elevated due to ongoing geopolitical tensions.
Investor Sentiment
Optimistic View
Investors will continue to show demand for long-tenor AAA issuers.
Pessimistic View
Investors will remain selective, leading to a slowdown in issuances.
Key facts
- Listed Issuances in July
- Rs 58,781 crore
- Listed Issuances in June
- Rs 98,995 crore
- Overall Issuances in July
- Rs 92,799 crore
- Overall Issuances in June
- Rs 1.16 lakh crore
- 10-year AAA-rated bond yield
- 7.40% (after easing from 7.55%)
- 3-year bond yield increase
- 25 basis points
- 10-year G-Sec yield
- 6.76% (after easing from above 6.80%)
- Crude oil price surge
- $100 a barrel (before easing to around $83)
Quotes
Venkatakrishnan Srinivasan
Founder and managing partner, Rockfort Fincap LLP
“This headline-driven market has made it extremely difficult for issuers and investors to establish any meaningful pricing benchmark.”
financialexpress.com
“After the renewed strikes, corporate bond yields have gone up by 10 bps, which led to a slowdown in issuances.”
financialexpress.com
Mataprasad Pandey
Vice‑President, Arete Capital
“Once crude oil prices, one of the key drivers of bond yields, begin to decline, we may see a revival in corporate bond issuances in the coming months.”
financialexpress.com
Sources
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