Liquidity measures help reduce financing cost in corporate bond mkt: RBI

Yields have dropped and the spreads have compressed despite foreign portfolio investment outflows of around $3 billion from corporate bonds in 2020, says article

Abundant surplus liquidity in the system provided by the Reserve Bank amid Covid-19 related dislocations in the financial market has helped reduce financing cost in the corporate bond market to decadal lows, according to an article published in the RBI Bulletin.

The article has been prepared by Radha Shyam Ratho and Pradeep Kumar of the Financial Markets Operations Department of Reserve Bank of India (RBI).

RBI deployed several conventional and unconventional tools to restore orderly conditions in financial markets and maintain normal functioning of financial intermediaries, the article published in RBI's monthly bulletin for July showed.

Abundant liquidity provided through