Foreign investment in Indian corporate bonds hits 10-year high in May on SP Group deal
Foreign investment in Indian corporate bonds surged to ₹20,996 crore in May — the highest in a decade — largely driven by a $3.35 billion bond sale by the Shapoorji Pallonji (SP) Group, according to a Business Standard report.
The SP issue, offering a 19.75% annual yield, saw participation from global investors including Deutsche Bank, BlackRock, and Morgan Stanley.
NSDL data shows a sharp turnaround from an outflow of ₹8,879 crore in April. This marks the strongest monthly inflow since January 2015.
The momentum comes amid the RBI’s move to scrap key restrictions for foreign portfolio investors (FPIs) in corporate debt, such as the short-term and concentration limits.
This policy shift is expected to boost foreign appetite, especially for high-yield, lower-rated bonds amid tightening spreads between Indian and US high-grade debt.
Yields on AA-rated three- and five-year bonds stand at 7.34% and 7.45%, respectively, while BBB-rated peers offer over 10%. Industry experts say investors are now selectively chasing risk-adjusted returns in the high-yield segment.
FPIs have been reducing exposure to Indian G-Secs, withdrawing over ₹25,500 crore this quarter, as yields softened amid easing inflation and fiscal consolidation.
However, the success of the SP Group's unlisted bond deal is seen as a key trigger for renewed foreign interest in India’s high-yield debt space.
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