Corporate bonds

Rate hikes fuel demand for corporate bonds

Mumbai: Corporate bond issuance rose more than 16% month-on-month in July to Rs 58,452 crore due to lower yields on these instruments. Further rate hikes guided by various central banks will be data-driven and more situational. This boosted demand for papers as investor appetite improved.

According to data from the Prime database, banks and corporates raised Rs 58,452 crore in July compared to Rs 50,099 crore in June. Since the start of this calendar year, issuance remained highest in the month of March, with companies raising Rs 81,580 crore.

Last week, the central bank‘s monetary policy committee raised the key rate by 50 basis points to 5.40%. It was the third consecutive rate hike by the central bank this year after rising 40 basis points in May and 50 basis points in June. With a rise of 50 basis points, the RBI has raised its rate by 140 basis points since May this year. “After the RBI policy, the market turned hawkish due to a 50 basis point rise in the repo. With expectations of a calibrated withdrawal of liquidity from the system, banks will be forced to raise their lending rates sharply. issuers can now turn to corporate bond issues,” Venkatakrishnan said. Srinivasan, Founder and Managing Partner of Rockfort Fincorp, a Mumbai-based debt advisory firm.