Falling bond, commercial paper yields signal liquidity stress is easing

Yields for corporate bonds and commercial paper (CP) have moderated since September 2018, indicating an easing of liquidity crunch, which had particularly hit non-banking finance companies

131 basis points (bps) – Yields in corporate bond market in May 2019 were lower than in Sept 2018 when the liquidity constraints were at the peak

24 bps – Fall in CP market yields during this period

Corporate bond market

76 bps – Cost of borrowings for AAA-rated housing finance companies (HFCs) fell from Sept

28 bps – It declined for AAA-rated non–NBFCs

CP market

337 – CP issuances in May (Rs 74,708 cr), up from 16 issuances in April 2019; in value terms, they were higher by Rs 66,420 cr

Rs 8,900 cr or 12% – Of total issuances in May were by HFCs, which did not raise short-term funds via CPs in April 2019

Rs 15,808 cr or 21% – Issuances in May were by non-NBFCs

Rs 23,325 cr – Raised by NBFCs, up 4X from Apr 2019

Yields in the NBFC segment have hit a nine-month low

Source: CARE Ratings