Long-term government bond demand surges as corporate debt dwindles, experts predict further rise
Economic Times 2 hrs ago·14 Aug 2026, 12:47 am
A significant shift is occurring in the Indian debt market as corporate borrowing slows down. With fewer companies issuing new bonds, demand for government securities has risen sharply. Major institutional investors, including insurance companies and the Employees' Provident Fund Organisation (EPFO), are increasing their holdings of long-term government bonds to maintain portfolio balance.
This trend is being driven by the anticipation that the Reserve Bank of India will keep interest rates steady. Investors are also looking forward to upcoming issuances of long-term bonds by NABFID and the RBI, which provide stable, risk-free returns. This move signals a preference for safety over high-yield corporate debt in the current economic climate.
For investors, this shift highlights the growing importance of government bonds as a safe haven. It suggests that liquidity is moving from the corporate sector to sovereign debt. Investors should monitor the RBI's policy decisions and the supply of new government bonds to understand how this demand might impact bond prices and yields in the coming months.
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