By Khushi Malhotra, Dharamraj Dhutia and Siddhi Nayak
MUMBAI (Reuters) -Indian companies are stepping up domestic currency borrowing as the central bank’s liquidity infusions have lowered local bond yields, while tariff concerns keep global rates elevated and investors cautious.
Domestic firms raised 987 billion rupees ($11.68 billion) through the sale of bonds in April, data from information provider Prime Database showed, a record for the first month of the financial year. A similar quantum can be expected in May with large borrowers like Reliance Industries and Jio Finance set to hit the market, bankers and investors say.
In contrast, no Indian company tapped the dollar debt market in April, according to LSEG data.
“There is a decent amount of capital available onshore, so they would not really come and issue in a softer market that will not get them the best pricing,” said Diwakar Vijayvergia, portfolio manager – Asia fixed income at Alliance Berstein.
“And I do not think investors are looking at adding risk significantly,” he said.
At least three companies – Adani Enterprises, Tata Capital, and Sammaan Capital deferred their planned dollar-bond sale, per bankers involved in the deal. Non-banking finance company, Shriram Finance, is also keeping its plans to borrow from overseas market on hold.
“Overseas borrowings, as of now, will be on hold because we do not know which way the interest rates will move and how much interest they will garner amid the tariff uncertainty,” said YS Chakravarti, the chief executive of Shriram Finance.
The other firms did not reply to Reuters’ emails for comment.
Indian companies raised an average of $870 million per month from January 2024 to March 2025 through dollar debt, according to LSEG data.
The U.S. 10-year treasury yield is down 27 basis points so far since January 2025.
“Market conditions have been impacted as a result of recent U.S. tariff-related announcements. As a result, we understand some of our clients are re-evaluating their financing plans,” said Shoaib Ahmed, director, debt capital markets at ANZ.
In the local markets, corporate bond yields plunged by 30-40 basis points in April after posting a similar decline in March.
The Reserve Bank of India cut the repo rate by 25 bps each in February and April, while changing stance to accommodative. It has flooded the banking system with 6.2 trillion rupees in January-April, and is set to buy debt worth 1.25 trillion rupees this month.
“With a couple of rate cuts, the bond markets have rallied, which demonstrates faster transmission of rates in bond markets than the traditional bank lending,” said Vinay Pai, head of fixed income at Equirus Capital. He anticipates a surge in local bond sales this year.
($1 = 84.5090 Indian rupees)
(Reporting by Khushi Malhotra, Dharamraj Dhutia and Siddhi Nayak, additional reporting by Jaspreet Kalra; Editing by Eileen Soreng)
