Indian corporates raised ₹2.37 trillion through private placements in Q1FY27, marking the third-highest April-June total since FY20 despite a 34% year-on-year decline from the record ₹3.58 trillion achieved in Q1FY26, according to data from Prime Database. This performance was significantly higher than the ₹2.04 trillion raised in Q1FY25 and nearly ₹3 trillion in Q1FY24. As reported by Business Standard, the June revival helped drive the quarterly total, with fundraising topping over ₹1 trillion in the final month alone following a series of issuances by state-backed NBFCs and development finance institutions as yields softened.
The corporate bond market recovery was driven by a combination of government and RBI policy initiatives that restored investor confidence. According to Business Standard, in June, the government announced tax exemptions for eligible foreign investors in government securities, while the RBI expanded the investment universe under the Fully Accessible Route (FAR), eased investment norms, introduced concessional forex swap facilities for eligible PSU ECBs, and supported hedging costs on fresh FCNR (B) deposits. Venkatakrishnan Srinivasan, founder and managing partner of Rockfort Fincap LLP, noted that Q1FY27 was a tale of two contrasting phases, with subdued activity during April and May driven by escalating geopolitical tensions, elevated crude oil prices, and rupee weakness, while the market environment changed significantly in June with policy initiatives and easing geopolitical tensions.
Corporate bond yields have experienced significant softening, with AAA-rated corporate bonds maturing in five years falling to about 7.4-7.43% from approximately 7.8% in late May, according to the latest RBI data. As reported by Mint, those on one- and three-year AAA-rated corporate bonds have declined by 34 and 24 basis points to 7.54% and 7.52% respectively. The 10-year government securities yield eased 25 basis points in June over May, with yields coming down by 38 basis points from the peak of 7.13% on May 18, as reported by Business Standard. Ajay Manglunia, executive director and head - fixed income market at Capri Global Capital, noted that corporate bond yields have softened by around 50-60 basis points, from about 8% to nearly 7.40%, compared with a 25-30 basis points decline in government security yields.
According to Mint reports, Bajaj Finance raised ₹2,000 crore through a five-year bond at a coupon of 7.92% on 23 June, 8 basis points lower than its ₹1,822 crore five-year bond at 8.00%. Cholamandalam Investment and Finance Co. issued a three-year paper at 8.15% on 17 June after borrowing through the same maturity paper at 8.35% on 20 May. National Bank for Agriculture and Rural Development (Nabard) raised ₹4,250 crore through a three-year bond at a yield of 7.49% on 20 April but cancelled its ₹7,000 crore July 2029 bond on 15 May because bids had touched 8.00%. Nabard tapped the market with the same issue on 10 June and raised ₹6,780 crore at 7.34%.
According to Venkatakrishnan Srinivasan, the benchmark 10-year government bond yield has declined to 6.77% from a high of 7.13%, supported by lower crude oil prices, stronger foreign portfolio investment, RBI liquidity support and measures to attract overseas capital. However, he cautioned that much of the benefit from monetary easing and recent policy initiatives appears to have been priced into the bond market, stating that unless fresh positive catalysts emerge, there may be limited room for further sharp decline in bond yields. Srinivasan noted that if inflationary pressures re-emerge due to adverse monsoon conditions, higher commodity prices or renewed geopolitical tensions, markets could gradually begin factoring in the possibility of monetary tightening during the second half of FY27. Killol Pandya, head of fixed income at JM Financial Asset Management, observed that falling yields were gradually restoring confidence among issuers, with the market moving towards normalcy though still far from normal conditions.
