Big Indian firms opt for floating-rate bonds as rates rise
With interest rates likely to rise soon (thanks to inflation and high oil prices), big Indian firms are ditching traditional fixed-rate bonds and trying out floating-rate bonds instead.
These bonds have interest rates that adjust every few months, so companies can start off paying less, and if rates go up, investors get a better deal too.
Firms to raise 8550cr this week
Names like ICICI Home Finance, Tata Capital, Mahindra & Mahindra Financial Services, and HDB Financial Services are set to raise nearly ₹8,550 crore this week using these flexible bonds.
Right now, these floating-rate bonds offer slightly lower yields than fixed ones (about 7.35%), but with the right strategies, investors could see returns closer to 8.85%.
It's a win-win: companies keep borrowing costs down while investors stay protected if rates spike.