Corporate bond market saw record issuances in FY25, says RBI report

RBI's Financial Stability Report says corporate bond issuances rose to ₹9.9 trillion in FY25, but secondary market turnover and bond spreads signal subdued activity

India’s corporate bond market recorded its highest-ever fresh issuances in the previous financial year (FY25), even as trading activity in the secondary market remained subdued, the Reserve Bank of India (RBI) said in its Financial Stability Report (FSR) on Monday.

 

The net outstanding corporate bond stock rose to ₹53.6 trillion as of March-end, buoyed up by a record ₹9.9 trillion in fresh issuances during the year.

 

Despite the buoyant primary activity, the secondary market remained lacklustre, the report said. The average monthly turnover stood at just 3.8 per cent of the outstanding value.

 

“In the debt market, corporate bond net outstanding rose to ₹53.6 trillion at the end of March 2025, with the highest-ever fresh issuances of ₹9.9 trillion during 2024-25. Secondary market, however, remained lacklustre, with average monthly turnover at 3.8 per cent of outstanding value,” the FSR said.

 

Market participants continued to prefer listed private placements, which dominated the mode of issuance, while public issuances remained a small fraction of total activity. 

 

AAA-rated entities led the fundraising, with lower-rated issuers (below AA) accounting for 16 per cent of total issuances. The report further said that corporate bond spreads widened modestly — by around 20-30 basis points (bps) across rating categories — despite a softening in yields. This was attributed to tight liquidity conditions, global trade uncertainties, and weaker growth prospects.

 

“Median spreads across rating categories were higher by 20-30 bps, even though yields softened. From a financial stability perspective, a deep and liquid corporate debt market is important as it provides an alternative to bank finance, widens investor base, and improves overall resilience of the financial system,” the report said.

 

The average daily turnover in the secondary market for corporate bonds rose to ₹7,645 crore in FY25, from ₹5,722 crore in the previous financial year. 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 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 these corporate bond yields and G-sec yields of similar maturity widened, indicating that the drop in corporate bond yields lagged behind the decline in G-sec yields.