Indian companies significantly reduced overseas bond issuances in FY26, with offshore bond fundraising falling to $8.1 billion, down from $13.9 billion a year earlier, representing a nearly 40% decline. According to data from Cbonds, a financial data provider, this marked a clear pivot toward local funding amid elevated global interest rates and currency volatility. In contrast, domestic bond issuances held steady at ₹12.32 lakh crore during April-February FY26, compared with ₹12.97 lakh crore in FY25, as reported by The Economic Times.
The shift toward domestic funding was driven by improved market conditions, with rates in the local market at the 7-8% range and abundant liquidity available. As reported by The Economic Times, a senior banker noted that this reduced the need to tap offshore markets. The trend was also influenced by currency pressures, as the rupee weakened amid global uncertainties including tariff-related disruptions, making unhedged foreign currency exposure riskier. Large issuers such as Greenko and Vedanta have already tapped domestic markets to refinance foreign currency debt, demonstrating this strategic shift.
The Reserve Bank of India recently relaxed norms for external commercial borrowings (ECB), raising limits to $1 billion, easing maturity requirements and removing caps on borrowing costs. According to The Economic Times, these changes are aimed at making offshore funding more accessible and cost-effective. However, issuance activity in offshore markets has become more selective, largely confined to investment-grade borrowers, while high-yield issuers face tighter conditions. Some diversification into alternative markets has emerged, with companies exploring currencies such as yen, though such issuances remain limited.
Market experts suggest this trend is likely to persist in the near term, with companies holding back on large commitments and closely watching global developments. As reported by The Economic Times, Utsav Johri from JSA Advocates & Solicitors noted that hedging costs are elevated and expose borrowers to currency risk. If global conditions stabilise, issuers with upcoming maturities, particularly large public sector borrowers, could return to overseas markets to refinance debt. The current market conditions reflect a cautious approach by Indian corporates toward international funding amid ongoing geopolitical uncertainties.
