Indian lenders and state-owned firms are reportedly accelerating their bond sales, aiming to raise approximately $3.5 billion before the release of India's GDP data and the Reserve Bank of India's (RBI) upcoming monetary policy decision. This move comes amid growing concerns that the central bank may not cut interest rates as previously anticipated.
Several major players in the Indian financial sector are involved in this flurry of bond issuances. Power Finance Corp (PFC), Indian Railway Finance Corp (IRFC), Small Industries Development Bank of India (SIDBI), and NABARD are collectively planning to raise ₹240 billion (approximately $2.7 billion). In addition, Axis Bank and Bank of India are looking to secure ₹75 billion. Specifically, Axis Bank intends to raise ₹50 billion ($560.69 million) through the sale of 10-year infrastructure bonds. Power Finance Corp plans to raise ₹60 billion ($672.80 million) through a combination of reissuing 7.60% April 2029 bonds and issuing new bonds with a 10-year maturity.
The timing of these bond sales is critical, as India is scheduled to release its GDP data for the July-September quarter on Friday, followed by the RBI's monetary policy decision on December 5. Economists had initially expected the central bank to cut rates next month. However, overnight index swaps, which serve as indicators of short-term rate expectations, suggest that the RBI may maintain the status quo. A strong GDP reading could further diminish the likelihood of interest rate cuts.
According to Saurav Ghosh, co-founder of the online bond trading platform Jiraaf, issuers are "front-loading" their bond plans because the expectations of a December rate cut have decreased. Ghosh suggests that this bond issuance strategy allows companies to secure current borrowing costs, as a decision by the six-member monetary policy committee to hold steady could potentially push yields higher. He added that large corporate issues are being comfortably absorbed by institutional investors, and the market should be able to digest the supply.
This flurry of bond activity highlights the strong demand for corporate funding and ongoing investor confidence in the Indian market. So far this fiscal year, Indian firms have raised nearly ₹6.9 trillion via bonds. Investors are closely monitoring rate movements, and the rush to issue bonds signals expectations that solid economic data will prevent the RBI from cutting rates soon, which could potentially lead to higher yields. The bond market in India includes government securities, treasury bills, state development loans, corporate bonds, municipal bonds and sovereign green bonds. The market is regulated by the Reserve Bank of India (RBI) and the Securities and Exchange Board of India (SEBI).
