The Indian corporate bond market is experiencing a notable recovery in early October 2025, fueled by investor anticipation of potential interest rate cuts by the Reserve Bank of India (RBI). After a challenging quarter with a 40% decline in bond issuance from July to September, corporate bonds are now seeing renewed investor interest.
Recent high-profile issuances include Bharti Telecom raising 105 billion rupees and SBI issuing 75 billion rupees in corporate bonds. Analysts predict that October issuance could exceed 1 trillion rupees, driven by favorable market conditions and expectations of lower borrowing costs.
Corporate bonds currently offer spreads of 70–90 basis points over government securities, attracting mutual funds and institutional investors. Funds such as Tata and Kotak Mahindra are increasing allocations to short-term and medium-term bonds to benefit from both spreads and potential rate cuts.
Investors are optimistic that supportive monetary policy, combined with strong demand, will lead to one of the highest years on record for corporate bond issuance, potentially surpassing 12 trillion rupees. The market rebound reflects both domestic economic confidence and the attractiveness of yield-seeking opportunities in a controlled interest-rate environment.
Overall, India’s corporate bond market is signaling resilience and growth, demonstrating how policy expectations and investor behavior can drive significant movements in bond markets.
