June revival helps corporate bond issuances hit third-highest Q1 since FY20

Corporate bond fundraising rebounded in June, helping India Inc raise ₹2.37 trillion in Q1FY27, the third-highest April-June total since FY20 despite a 34% YoY decline

Fundraising activity through corporate bonds picked up in June as rates turned favourable following a series of policy measures by the government and the Reserve Bank of India (RBI), which helped the numbers in the first quarter (April-June) of financial year 2026-27 (Q1FY27) to hit ₹2.37 trillion. In June, more than ₹1 trillion was raised via corporate bonds. During Q1FY26, ₹3.58 trillion was raised.

 

Though the Q1FY27 fundraising was lower compared to Q1FY26, it was still the third-highest April-June number since FY20.

 

According to data from Primedatabase, Indian corporates raised ₹2.37 trillion through private placements in Q1FY27, compared with a record ₹3.58 trillion in the corresponding period of FY26. Fundraising stood at ₹2.04 trillion in Q1FY25 and nearly ₹3 trillion in Q1FY24.

 

“Q1FY27 was a tale of two contrasting phases. The subdued activity during April and May was driven by escalating geopolitical tensions in West Asia, concerns over disruption to shipping through the Strait of Hormuz, elevated crude oil prices, weakness in the Indian rupee, fears of imported inflation, and uncertainty surrounding the southwest monsoon. All these factors collectively created a challenging environment for borrowers. Many issuers preferred to postpone their borrowing plans rather than lock in funds at elevated interest rates amid heightened volatility,” said Venkatakrishnan Srinivasan, founder and managing partner of Rockfort Fincap LLP.

 

“The market environment changed significantly in June. A combination of policy initiatives by the Government of India and the RBI, coupled with easing geopolitical tensions, helped restore investor confidence,” he said.

 

In June, the government announced tax exemptions for eligible foreign investors in government securities, while the RBI expanded the investment universe under the Fully Accessible Route (FAR), eased investment norms, introduced concessional forex swap facilities for eligible PSU ECBs, and supported hedging costs on fresh FCNR (B) deposits.

 

Fundraising in June topped over ₹1 trillion, following a series of issuances by state-backed NBFCs (non-banking financial companies) and DFIs (development finance institutions) as yields softened.

 

The yield on 10-year government securities eased 25 basis points (bps) in June (closing yield) over May. From the peak of 7.13 per cent on May 18, yields came down by 38 bps (as of June end). The softening of yields massively helped in bringing bank issuers to the bond market.

 

“March, April, and May were challenging months for the bond market as yields kept rising and there was considerable uncertainty over the geopolitical situation. That kept both issuers and investors on the sidelines. Once there was greater clarity and crude prices fell below $70 a barrel, sentiment improved significantly. Issuers who had deferred their fundraising plans came back to the market, while investors, who had been sitting on cash waiting for clarity, also started deploying money. That is why June saw such strong primary bond issuance activity. Corporate bond yields have softened by around 50-60 bps, from about 8 per cent to nearly 7.40 per cent, compared with a 25-30 bps decline in government security yields. Today, AAA-rated PSUs are able to borrow at around 7.40 per cent,” said Ajay Manglunia, executive director and head - fixed income market, Capri Global Capital.

 

“At present, much of the benefit arising from monetary easing and recent policy initiatives appears to have been priced into the bond market. Unless fresh positive catalysts emerge, there may be limited room for a further sharp decline in bond yields. On the other hand, if inflationary pressures re-emerge due to adverse monsoon conditions, higher commodity prices or renewed geopolitical tensions, markets could gradually begin factoring in the possibility of monetary tightening during the second half (H2) of FY27,” said Srinivasan.