Indian companies are experiencing robust demand for long-term debt issuances, with four state-run companies raising ₹12,000 crore ($1.26 billion) through bonds maturing in 10 years or more over the past four days. According to The Hindu BusinessLine, four or five more companies plan similar issues in September, with three bankers confirming the pipeline. The yield gap has narrowed significantly, with shorter-duration corporate bond yields seeing a spike after hawkish commentary from the central bank, which brought rate hikes back on the table for 2026. This trend reflects growing investor appetite for long-duration assets from insurers and pension funds driven by liability matching requirements.
State-run Power Finance Corp and REC raised ₹2,500 crore each through 15-year and 10-year bonds last week, while Bajaj Finance raised ₹5,000 crore through 10-year notes. The Hindu BusinessLine reports that Cholamandalam Investment raised ₹2,000 crore via perpetual bonds with a 10-year call option. Life Insurance Corp, India's largest insurer, was the sole buyer of Bajaj Finance's notes, while premiums on PFC and REC bonds over comparable government debt fell to 18-month lows. Bankers noted that limited issuance of long-dated debt by highly rated companies, state governments and New Delhi is also driving demand.
The strong demand for long-term debt is primarily driven by insurers and pension funds with growing investible corpuses that need to match these with long-duration liabilities, as explained by Vinay Pai, MD & Head of Fixed Income at Equirus Capital. Sachin Bajaj, Executive Vice President and Chief Investment Officer at Axis Max Life Insurance, noted that moderation in state debt issuance following heavy supply seen in January-March has supported demand for long-dated paper. However, some investors remain cautious about the trend's sustainability, with Vidya Iyer, head of fixed income at ICICI Prudential Life Insurance, stating that recent issuances do not signal a structural shift but were instead absorbed by investors with specific requirements.
This surge in long-term debt activity comes as Indian companies have borrowed ₹7.7 trillion via domestic bonds so far this year, which is down 7% from a year ago, according to data compiled by Bloomberg. The deal pipeline is expected to help boost the domestic bond market after a slow start this year as companies opted for bank loans due to lower rates. New Delhi cut the share of ultra-long, 30-year to 50-year bonds in its April–September borrowing programme to 25% from 35% a year earlier. Bankers indicate that PFC and REC could return to the market, while the National Bank for Financing Infrastructure and Development (NaBFID) and National Bank for Agriculture and Rural Development (NABARD) may also sell longer-dated debt in September. The trend reflects companies' strategic shift toward longer-duration financing amid favorable market conditions.
Vedanta Group is in the process of shoring up its balance sheet after listed entity Vedanta Ltd. was split into five separate companies, with four focusing on aluminum, power, oil and gas, and iron ore. According to The Economic Times, Vedanta Aluminium Metal Ltd. is said to be planning to raise about ₹13,500 crore from at least three banks. The restructuring represents a significant corporate reorganization within the conglomerate controlled by billionaire Anil Agarwal.
