India Inc locks in debt as liquidity stays ample

That has opened a window for companies ranging from Reliance Industries to Larsen & Toubro, Muthoot Fincorp and REC to raise money at still-manageable coupons. Reliance plans to mobilise as much as ₹12,500 crore through five-year bonds, while L&T has already raised ₹500 crore via tokenised bonds with a three-year maturity. Muthoot Fincorp is seeking up to ₹700 crore in bonds due in two to six years, and REC has raised ₹500 crore through a 20-month issue.

The backdrop is a banking system awash with rupees after lenders swapped $127.23 billion of FCNR(B) inflows under the RBI’s concessional window, receiving equivalent rupee liquidity from the central bank. That has kept domestic funding conditions easier than they would otherwise have been, even as crude prices climb and raise the odds of imported inflation.

For treasurers, the attraction is timing. Ajay Manglunia of Capri Global Finance said the current liquidity situation is creating a chance to borrow before rates potentially rise further. He noted that a 7.47% coupon on five-year paper is still reasonable for an AAA-rated borrower, though six months ago the same debt would likely have priced closer to 7.0% to 7.1%. Several public-sector borrowers were still raising money near 7% before the recent move in rates.

For investors and banks, the trade-off is straightforward: surplus cash needs a home, and corporate bonds offer better yield than the overnight market. For issuers, the danger is that this window may not last if the RBI starts leaning against inflation, especially if oil prices continue to pressure the outlook.

The result is a classic pre-tightening funding wave. Companies are front-loading debt issuance, banks are extending duration for a bit more return, and bond buyers are trying to secure yield before monetary conditions turn less forgiving.