Foreign Investment in Indian Corporate Bonds Hits Decade High in May - News

Foreign investment in Indian corporate bonds surged to a 10-year high in May 2025, reaching INR 20,966 crore. This spike was largely driven by the Shapoorji Pallonji (SP) group’s US$ 3.35 billion bond issuance. 

The sudden spike drew interest from major global investors, including Deutsche Bank AG, BlackRock Inc, and Morgan Stanley. The SP group issued three-year bonds with a 19.75 percent yield, compounded annually and payable at maturity. This marks a sharp turnaround from April 2025, when foreign investors pulled out INR 8,879 crore. The last time inflows reached such levels was in January 2015, with INR 21,660 crore.

So far in FY25, foreign investment in corporate bonds totals INR 12,382 crore, a significant increase from INR 4,511 crore in FY24. According to the National Securities Depository Ltd (NSDL), total foreign investment stood at INR 1.28 trillion as of June 4, 2025—just 16.74 percent of the utilized limit, which stands at INR 6.35 trillion.

This comes amid the Reserve Bank of India’s (RBI) recent move to remove restrictions such as the short-term investment limit and concentration limits for foreign portfolio investors (FPIs) in corporate debt securities to provide greater investment flexibility.

Ajay Manglunia, Executive Director, Capri Global Capital, noted that corporate bonds offer higher returns than G-Secs, especially in lower-rated segments where double-digit yields are possible.

Venkatakrishnan Srinivasan, Founder and Managing Director, Rockfort Fincap LLP, added that the recent success of a high-yield, unlisted bond issuance has renewed FPI interest in risk-adjusted opportunities beyond AAA-rated instruments.