The overall domestic bond issuances in fiscal 2023 are likely to be in the ₹7-7.5-lakh-crore range, posting a growth of 4 to 11 per cent over issuances of ₹6.8-lakh-crorein FY22, reported Business Line attributing ICRA.
Domestic rupee-denominated bond issuances more than doubled sequentially to ₹2.1-lakh-crorein Q2 FY23 an increase from a multi-year quarterly low of ₹1-lakh-crore in Q1 (April-June) FY23, driven by an all-time high issuance by banks of ₹53,900 crore, while NBFC issuances also remained strong at ₹1.1-lakh-crore, the credit rating agency said.
The overall bond issuances were at ₹3.3-lakh-crorein H1 (April-September) FY23. Bond issuances of ₹3.7-4.2-lakh-crore are expected in H2 (October-March), per ICRA’s assessment.
Domestic bond issuances more than doubled in Q2 (July-September) FY23 even as External commercial borrowings (ECBs) remain subdued due to rising funding costs overseas, the agency said.
Net of scheduled redemptions, the volume of bonds outstanding will riseto ₹41-42-lakh-crore by March 31, representing a modest year-on-year (y-o-y) growth of 4-5per cent, it added.
During the first five months of this fiscal, ECB approvals sought by India Inc from Reserve Bank of India (RBI) fell by 24 percent on y-o-y basis to $8.3 billion.
Given the larger increase in policy rates by central banks in developed economies and consequent rise in overseas borrowing costs, the all-in borrowing costs for Indian corporations have been higher than domestic funding costs and are likely to remain so in near term, the agency said.
This is projected to keep approvals low at $30-35 billion compared with $38.6 billion in FY22 and $35.1 billion in FY21.
Even though policy tightening by RBI is likely to continue, the magnitude of incremental hikes may be less than hikes since May, opined the agency.
ICRA anticipates incremental policy rate hikes in policy meetings until December, with an increase of 25-35 basis points followed by a hiatus.
It also anticipates net outflows from the foreign institutional investor (FII) segment of $8-13 billion in FY23, down from outflow of $16 billion in FY22.