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Corporate bond investments by private firms surge sharply in FY25 as equity bets decline: RBI
/ 2 min read
Further, another inclusion by Bloomberg Bond Index boosted the flows in the latter part of FY25. | Credits: Getty Images
Corporate bond investments by private firms surge sharply in FY25 as equity bets decline: RBI
Private non-financial companies sharply shifted from equities to debt in FY25, with investments in bonds and debentures soaring to ₹35,981 crore from just ₹224 crore a year earlier, RBI data show. The surge coincided with higher corporate bond issuances, attractive yields, and global index-driven bond rallies, while equity and mutual fund allocations fell steeply.
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The yield on these instruments remained broadly in the range of 6.5-15% across maturities and ratings on the BSE and NSE electronic bidding platform.
Further, another inclusion by Bloomberg Bond Index boosted the flows in the latter part of FY25. | Credits: Getty Images
Private sector companies’ investments in bonds and debentures shot up manifold in FY25, the Reserve Bank said on Monday.
Analysis of 15,919 non-government, non-financial private companies by the central bank revealed that such entities invested ₹35,981 crore in bonds or debentures in 2024-25, as against just ₹224 crore in the year-ago period.
During this period, corporate bond issuances increased to ₹9.87 lakh crore in FY25, compared to ₹8.38 lakh crore in the previous fiscal year.
The yield on these instruments remained broadly in the range of 6.5-15% across maturities and ratings on the BSE and NSE electronic bidding platform.
Indian bond market has seen a sharp investment by the foreign investors, specifically in the government securities market after the JP Morgan announced the G-sec inclusion in to their index. The announcement came in the second half of FY24, and the actual inclusion happened in June 2024.
Further, another inclusion by Bloomberg Bond Index boosted the flows in the latter part of FY25.
Both these inclusion had lifted the prices of the bond making it a good investment avenue for the investors. These price movements have followed in the corporate bond market too, leading to higher issuances and higher investment.
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Further, RBI data showed that investment by these select entities in equity instruments or shares fell by 62.25% year-on-year to ₹59,945 crore in FY25, from ₹1.59 lakh crore in FY24.
Similarly, investment in mutual funds fell to ₹3,656 crore in FY25, as compared to ₹6,700 crore in FY24.
During 2024-25, the share of external sources of funds in total funds increased to 53.6% from 52.3% in previous year largely due to current liability.
Operating profit and profit after tax continued to show double digit growth in FY25 on the top of high growth in the preceding year. Net profit margin and return on equity (profit after tax to net worth) improved during FY25 mainly due to the services sector.
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