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Indian companies are tapping the local bond market like never before. Firms have raised a record Rs 4 lakh crore through bonds and non-convertible debentures, in the first 11 months of 2016.
The widening gap between bank interest rates and bond rates has fuelled the growing interest in the Indian corporate debt market. The average yield for three-year AAA-rated corporate notes slumped 45 basis points in November, the biggest monthly decline since 2013.
With further rate cuts from the Reserve Bank of India looking increasingly likely, bond yields could come down further. That in turn would make corporate bonds even more attractive for investors.
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