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Investments by foreign portfolio investors (FPIs) in corporate bonds grew by 11.4 per cent in 2024–25, rising from ₹1.08 trillion in 2023–24 to ₹1.21 trillion in FY25, according to the Reserve Bank of India’s Annual Report 2024–25.
However, 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, primarily due to an expansion in the absolute investment limits for FPIs, the report said.
Primary corporate bond issuances during the year rose by 16.1 per cent to ₹9.9 trillion, up from ₹8.6 trillion in 2023–24. Outstanding corporate bonds (as of end-December) also increased by 13.3 per cent, reaching ₹51.6 trillion compared to ₹45.5 trillion in the previous year, the report noted.
Additionally, primary issuances of listed corporate bonds on domestic stock exchanges increased in the year, along with higher mobilisation through overseas markets. Private placements continued to dominate as the preferred mode of issuance, accounting for 99.2 per cent of total funds raised in the domestic bond market.
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The report highlighted that average daily turnover in the secondary market rose to ₹7,645 crore in 2024–25, up from ₹5,722 crore in the previous financial year. “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,” it stated.
Corporate bond yields declined in line with government securities (G-sec) yields, with the average yield on AAA-rated 3-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 these corporate bond yields and G-sec yields of similar maturity widened, indicating that the drop in corporate bond yields lagged the decline in G-sec yields.
“Corporate bond yields softened during 2024–25, mirroring G-sec yields. The monthly average yield on AAA-rated 3-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 added.
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