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RBI’s Game-Changer: Big Boost for Corporate Bond Yields

By Aspero

  • November 20, 2023
  • 1 min read

The RBI has introduced new regulations, making it tougher for banks to lend to consumers and Non-Banking Financial Companies (NBFCs). This change is a big deal because it’s expected to boost corporate bond yields by 5-15 basis points. In the bond market, that’s quite significant!

Check out Moneycontrol’s detailed article on the regulation below 

Let us break down what this means for you:

Shift in Banking Strategy

Due to these new RBI rules, banks might increase their lending rates. This could lead NBFCs to turn to corporate bonds for funding, potentially enhancing the market’s activity and your potential returns as an investor.

Increased Earnings from Bonds

This shift could mean slightly higher returns from corporate bonds, with experts predicting a rise in yields of 10-25 basis points. This is great news for your investments!

Selective Landing by Banks

Banks are becoming more selective in their lending practices. This might drive even more borrowers towards corporate bonds.

Despite a recent decrease in the number of corporate bonds issued, major financial and infrastructure firms remain active and strong in this area. We’re seeing an encouraging rise in the returns these bonds offer and this latest RBI regulation will further make this instrument more lucrative.

For you, as a retail investor new to bonds, this presents a fantastic opportunity. The evolving financial landscape could make corporate bonds a wise addition to your investment portfolio, potentially offering higher returns than traditional investments.

If you are looking to explore bonds, there’s no better time than now. Sign up on Aspero and make the most of this golden period to diversify your portfolio.