Corp bond secondary mkt daily turnover grows around 2K-cr in FY25: RBI

Corporate bond yields declined in FY25 but lagged G-sec yields, widening spreads; private placements led issuances and FPI limit usage dipped slightly, shows the RBI report

The average daily turnover in the secondary market for corporate bonds rose to ₹7,645 crore in 2024–25, up from ₹5,722 crore in the previous financial year, according to the Reserve Bank of India’s (RBI’s) annual report for 2024–25.

 

‘Average daily turnover in the secondary market on corporate bonds increased to ₹7,645 crore during 2024–25 from ₹5,722 crore during the previous year,’ the report said.

 

Corporate bond yields declined in line with government securities (G-sec) yields, with the average yield on AAA-rated three-year bonds falling by 15 basis points (bps) for public sector undertakings (PSUs), financial institutions (FIs) and banks; 28 bps for non-banking financial companies (NBFCs); and 33 bps for corporates as of March 2025 compared to March 2024. 

 

However, the spread between corporate bond yields and G-sec yields of similar maturity widened, indicating that the decline in corporate bond yields lagged behind the fall in sovereign bond yields.

 

‘Corporate bond yields softened during 2024–25, mirroring G-sec yields. The monthly average yield on AAA-rated three-year bonds of PSUs, FIs and banks; NBFCs; and corporates fell by 15 bps, 28 bps and 33 bps, respectively, in March 2025 vis-à-vis March 2024,’ the report said. 

 

Primary issuances of listed corporate bonds on domestic stock exchanges also rose during the year, alongside increased mobilisation through overseas markets. Private placements remained the dominant mode of issuance, accounting for 99.2 per cent of total funds raised in the domestic bond market.

 

Foreign portfolio investors (FPIs) increased their investments in corporate bonds during FY25. However, the utilisation of the approved investment limits declined slightly to 15.8 per cent as of end-March 2025, down from 16.2 per cent a year earlier. The decline was attributed to an expansion in the absolute investment limits for FPIs.