State Bank of India remains optimistic that corporate credit offtake will gain momentum amid early signs of a slowdown of funds mobilised through the bond market.

Corporate houses have been tapping the equity and bond market as an alternative to bank credit to meet their capital requirement, despite a reduction in interest rates after a reduction in repo rate by the RBI.

Sebi data shows total funds mobilised through the corporate bond market through private placement as well as public issue reached a peak of ₹1,07,524 crore in June before falling in July to ₹58,109 crore.

The total amount raised through corporate bonds in the April-July period stood at ₹3,86,812 crore across 730 issues (see chart). The 10-year bond yield had shot up to 6.6 per cent, while 30-year bond yields increased to 7.3 per cent in August, leading to a slowdown in issuances during the month.

“Issuance volumes have come down in the current quarter. If the yields continue to remain firm, they (corporates) may come back to the banking system,” said Rama Mohan Rao Amara, MD, international banking, global markets and technology, SBI at a CII organised Banking Colloquium on Wednesday.