Despite all this, issues in September 2021 were the highest, with companies raising over Rs 92,000 crore.Despite all this, issues in September 2021 were the highest, with companies raising over Rs 92,000 crore.

Fundraising by companies through corporate bond issuance in the first half of the current fiscal year across the holding period and ratings decreased 30% year-over-year due to lower corporate issuance and a lack of central bank support this year. Between April and September this year, companies raised Rs 2.68 thousand crore compared to Rs 3.80 crore in the corresponding period last year, according to SEBI data.

Market participants also said the drop in issuance could also be attributed to higher yields on corporate bonds across holding periods and ratings. The movement in corporate bond yields was seen after the central government announced higher-than-expected borrowing and higher G-Sec yields due to international factors such as higher crude oil prices and US Treasury yields.

Yields on corporate bonds maturing in the 3-, 5- and 10-year tranches rose by 5-10 basis points in April and September of this year, compared to a similar period in the previous fiscal year. Besides, pressure on corporate bond yields is increasing due to upward pressure on benchmark bonds in the past few days. Benchmark government bonds traded 6.10%-2031, 18 months higher on Monday.

“The increase in borrowing cost and lower issuance is due to higher-than-expected borrowings via G-Sec in the current year as reported in the budget and revenue rose in parallel with higher revenue in G-Sec,” said Ajay Mangalonia, Managing Director and CEO of G-Sec. . Fixed Institutional Income at JM Financial.

Despite all this, issues in September 2021 were the highest, with companies raising over Rs 92,000 crore. This is because some issuers said a resumption of business activity and some rise in credit demand was also expected, prompting some non-bank finance companies to tap the market to make money that led to higher issuances in September 2021.

Last year in the first half of the fiscal year, the corporate bond market was buoyed by the Reserve Bank of India (RBI), which announced Targeted Long-Term Repo (TLTRO) and Long-Term Repo (LTRO), in the wake of the pandemic that Attracting a lot of banks to buy corporate bonds, but that seems to be absent this year.

“Issues in H1 FY22 versus H1 FY21 look low because in FY21 higher borrowings were supported by the deployment of unconventional monetary policy instruments such as LTRO and TLTRO by RBI. Sidharth Chaudhry, Senior Fund Manager, Fixed Income said TLTRO and LTRO provided banks with access to cheap money from the central bank, which they used to invest in specific sectors via debt instruments such as corporate bonds, commercial paper, and non-revenue bonds. convertible.

Meanwhile, the market is now grappling with issues of timing and pace to end the monetary easing provided in the wake of the crisis, and the global debate has gradually progressed in the direction of normalization. “With all the major central banks either reducing their asset purchases or about to do so, some are even looking for tight rates in the coming years,” Chaudhry added.

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