Indian banks, state firms plan $3.5bn of bond sales before GDP, RBI policy, bankers say

MUMBAI: Indian lenders and state-run firms are racing to raise up to $3.5 billion through bonds ahead of India’s GDP data and monetary policy decision amid concerns that interest rates might not be slashed, bankers said on Monday.

State-owned Power Finance Corp , Indian Railway Finance Corp , Small Industries Development Bank of India, and NABARD aim to raise a combined 240 billion rupees ($2.7 billion), while Axis Bank and Bank of India plan to raise 75 billion rupees, according to bankers, who did not want to be named as they are not authorised to speak to media.

India’s GDP data for the July-September quarter is scheduled for Friday and the monetary policy decision will follow on December 5.

While economists expect the central bank to cut rates, overnight index swaps — a key indicator of short-term rate expectations — suggest a status quo. A stronger growth print will also reduce the likelihood of rate cuts.

“Issuers are front-loading their bond plans because hopes of a December rate cut have diminished. This is companies’ way of locking current borrowing costs, since any status-quo decision by the six-member panel could push yields higher,” said Saurav Ghosh, co-founder of online bond trading platform Jiraaf.

Large corporate issues are being comfortably absorbed by institutional investors, and the supply should be digested by the market, Ghosh said.

Indian companies have raised 6.87 trillion rupees via bonds so far this fiscal year that ends March 2026, according to data aggregator Prime Database.

Even if the Reserve Bank of India cuts rates, it is unlikely to have a significant impact on yields, Suresh Darak, founder of Bondbazaar, an online bond trading platform, said.

“Only measures like open market purchases or a cut in cash reserve ratio can create a stronger downward impact on yields.”