RBI's liquidity measures bring down top-rated corporate bond spreads

The yield contraction helped companies raise money and tide over the tight liquidity conditions they were facing after defaults by prominent NBFCs such as IL&FS and DHFL

The liquidity surplus in the system has brought down the corporate bond spreads, or the difference between corporate bond yields and equivalent maturity, substantially, and in some cases even below the pre-Covid level. The contraction in spreads was visible across all rating segments, except the lowest rated BBB- corporates, according to the data from the Reserve Bank of India (RBI) and Fixed Income Money Markets and Derivatives Association (FIMMDA). 

The yield contraction helped companies raise money and tide over the tight liquidity conditions they were facing after defaults by prominent non-banking financial companies (NBFCs) such as IL&FS and DHFL. However,