Indian Companies Shift to Long-Term Bonds Amid Rate Hike Fears
Top Indian companies are issuing longer-term debt as investors anticipate interest rate hikes from the Reserve Bank of India.
Top-rated Indian companies are shifting toward longer-term bond issuances as expectations grow for interest rate hikes by the Reserve Bank of India. This trend has caused a rare inversion of the corporate bond yield curve, with 10-year debt yields falling below those of three-year paper for the first time in over a month.
Power Finance Corporation and its unit, Resource & Environmental Consultants Ltd., both withdrew planned short-term bond sales to prioritize longer-dated debt, including a 15-year issuance. Similarly, Bajaj Finance Ltd. raised 50 billion rupees through 10-year notes, with the Life Insurance Corporation acting as the sole buyer of the 2036 bond.
The shift is driven by strong demand from pension and provident funds and an investor belief that any upcoming rate-hiking cycle will be brief. While yield curve inversions typically signal economic concern, Reserve Bank of India Deputy Governor Poonam Gupta expects the economy to grow near 7% this financial year.
Keep reading in the app
The full story and every source, free in the app.
Coming soonGoogle Play