Bond offerings by corporations escalate by 86% to a record ₹2.9 trillion in Q1 FY26 due to falling interest rates
In the first quarter of the financial year 2026 (FY26), there has been a significant increase in corporate bond issuances, marking a robust trend in the market.
Key factors contributing to this trend include the Reserve Bank of India’s (RBI) monetary easing, strong economic growth, and enhanced investor appetite—including for lower-rated corporates.
The RBI’s rate reductions by about 100 basis points and the anticipation of further cuts have reduced borrowing costs for companies, spurring corporate bond issuance as firms aim to refinance debt or fund expansions at cheaper rates.
A quicker pass-through of policy rate cuts to lending rates has increased the attractiveness of bonds over bank loans for financing. India’s robust GDP growth (~6.8-7% in Q1 FY26) and improving corporate earnings support increased financing needs, encouraging issuances.
There is also growing demand for lower-rated corporate bonds as investors seek higher yields amid the easing rate environment. This demand helps improve pricing and liquidity for a wider array of corporate issuers.
Trends such as rising short-term bond issuances, retail participation, and ESG bonds further diversify and deepen the corporate bond market, supporting increased volumes.
Corporate bond issuances increased by 86% in the first quarter of FY26 compared to the same quarter in FY25. The total corporate bond issuances have touched ₹6 lakh crore.
Companies and financial institutions are locking into long-term funds at attractive rates due to the fall in interest rates. The slow transmission of the policy rate cuts in bank lending rates is aiding this trend.
In FY23, ₹7.6 lakh crore was raised through corporate bond issuances, which increased to ₹9.94 lakh crore in FY25. In FY24, ₹8.5 lakh crore was raised through corporate bond issuances.
The growing demand for lower-rated bonds from High Net Worth Individuals (HNIs) and institutional investors has expanded the number of companies tapping the corporate bond market. The 3-month money market (commercial paper/certificate of deposit) rates have fallen over 135 basis points in calendar 2025.
In summary, the combination of RBI’s monetary easing, strong economic growth, and enhanced investor appetite—including for lower-rated corporates—has collectively driven a significant surge in corporate bond issuances in Q1 FY26.
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