Corporate borrowers in India are increasingly opting for bank loans instead of bond issuances. Rising capital market yields have eroded the cost advantage of bonds. Spreads between bank lending rates and bond yields have compressed significantly, especially for higher-rated entities.
Corporate borrowers are shifting their fundraising strategies toward bank loans as rising capital market yields diminish the appeal of bonds. The Economic Times reports that spreads between bank lending rates and bond yields have significantly compressed, particularly for higher-rated entities and NBFCs. This change reflects a broader trend in refinancing and funding choices driven by cost considerations. This move away from Bond Street highlights how market conditions are influencing corporate finance decisions. Higher-rated companies find bank funding more competitive, prompting a notable pivot in how they raise capital. The trend underscores the sensitivity of borrowing strategies to yield movements. No specific figures on loan volumes or bond issuances were detailed, but the shift is described as significant across corporate borrowers.