2 days ago
Indian Firms Extend Debt Maturities as Long-Term Demand Strengthens
Indian companies are borrowing money for longer periods than before.
They are doing this because insurers and pension funds want investments that last many years.
These investors have more money to invest and need assets that match their long-term obligations.
Four state-run companies recently raised ₹12,000 crore through long-term bonds.
Power Finance Corporation and REC were among the issuers.
Bajaj Finance and Cholamandalam Investment also sold long-term debt.
Fewer very long government and state bonds have helped create more demand for corporate bonds.
However, some investors believe this activity may be temporary rather than a lasting change.
Four state-run companies raised ₹12,000 crore through bonds maturing in 10 years or longer over four days.
Power Finance Corporation and REC each raised ₹2,500 crore through 15-year and 10-year bonds.
Bajaj Finance raised ₹5,000 crore in 10-year notes, while Cholamandalam Investment issued ₹2,000 crore in perpetual bonds.
Four or five more companies may issue longer-term debt in September, including NaBFID and NABARD.
Some investors said recent deals reflect specific investor requirements rather than a structural shift toward long-term borrowing.
- Who
- Indian companies, insurers, pension funds, investors and bankers; named issuers include Power Finance Corporation, REC, Bajaj Finance and Cholamandalam Investment.
- What
- Companies are increasingly issuing bonds with maturities of 10 years or more as demand for long-term debt remains strong and yield differences across maturities narrow.
- Where
- India’s corporate bond market.
- When
- The reported bond issues occurred over the four days before August 31, 2026; additional issues are planned for September.
- Why
- Growing insurer and pension-fund investment pools, liability-matching needs, attractive yields and limited supply of long-dated bonds are supporting demand.
Long-Term Demand Reflects Lasting Needs
Recent Activity May Be Temporary
Investor demand
Long-Term Demand Reflects Lasting Needs
Insurers and pension funds have growing investible pools and long-term liabilities, creating continuing demand for long-duration assets, according to Vinay Pai and Sachin Bajaj.
Recent Activity May Be Temporary
Vidya Iyer said the recent issuances do not signal a structural shift and were instead absorbed by investors with specific requirements.
Market supply
Long-Term Demand Reflects Lasting Needs
Limited issuance of long-dated debt by highly rated companies, state governments and New Delhi, along with moderated state borrowing, is supporting demand for corporate bonds.
Recent Activity May Be Temporary
The current concentration of demand may not continue if the supply of long-dated government, state or corporate bonds changes.
Key facts
- Recent fundraising
- Four state-run companies raised ₹12,000 crore through bonds maturing in 10 years or more.
- Power Finance Corporation
- Raised ₹2,500 crore through 15-year bonds.
- REC
- Raised ₹2,500 crore through 10-year bonds.
- Bajaj Finance
- Raised ₹5,000 crore through 10-year notes; Life Insurance Corporation was the sole buyer.
- Cholamandalam Investment
- Raised ₹2,000 crore through perpetual bonds with a 10-year call option.
- September outlook
- Four or five more companies may issue similar longer-term debt in September.
- Government ultra-long bonds
- New Delhi reduced the share of 30-year to 50-year bonds in its April–September borrowing program to 25%, from 35% a year earlier.
Quotes
Vidya Iyer
Head of fixed income at ICICI Prudential Life Insurance
“The underlying demand for long-duration assets from insurers and pension funds remains primarily driven by their growing corpus, liability matching requirements and the relative attractiveness of yields.”
thehindubusinessline.com
“Insurance companies and pension funds are seeing growing investible corpuses and need to match these with long-duration liabilities.”
thehindubusinessline.com
Sources
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