India Inc debt fundraising halves in August; rebound unlikely this month, bankers say

Indian firms took in 617.6 billion rupees ($6.50 billion) through private bond placements during August, according to Prime Database figures cited by Business Recorder. That total was 45% lower than in July, as bond yields climbed along the whole curve, led by shorter maturities. Bankers quoted in the report see little chance of a rebound in September.

Issuance had been much stronger earlier, with 1.13 trillion rupees raised in June and 1.16 trillion rupees in July, a period that followed the central bank's steps to attract dollars. In late August, demand for shorter-dated paper weakened, which pushed some highly rated firms to pull sales or pay much higher rates. State-run PFC, REC and Nabard withdrew shorter-tenor bonds, while SIDBI had to pay 7.70% to raise three-year funds.

Venkatakrishnan Srinivasan of Rockfort Fincap argued that liquidity alone will not lift corporate bond sales, since the price investors demand is the real constraint. Issuers can choose other financing routes and have little reason to borrow at elevated domestic yields. If sovereign yields stay high, risk premiums could eventually be passed on to company debt and NBFC borrowing costs.