Corporate bond yields continue to harden despite RBI's repo rate cut

SBI, PNB, BoI expected to tap market for fund raise

Despite the Reserve Bank of India’s (RBI’s) recent decision to cut repo rate by 25 basis points (bps), corporate bond yields continue to rise due to a persistent liquidity deficit in the banking system over the past nine months, market participants said.

 

The rise in yields is also driven by a surge in corporate bond supply, as companies issue more debt to raise capital, putting upward pressure on yields.

 

Net liquidity in the banking system was in a deficit of ₹1.8 trillion on Monday, latest data by the RBI showed.

 

On the other hand, government bond yields have remained largely