Why have Indian companies been borrowing so aggressively since April this year?

You are absolutely correct that in the last five months since April, Indian companies have virtually dominated the debt markets. Most of the funds here have been raised through private placements of debt with the qualified institutions.

One reason the Indian corporates have been extremely aggressive in raising debt from the market are the absolutely attractive borrowing rates. The major reason for this rush to borrow is the unusually low spreads at which companies are able to borrow.

The massive stimulus measures undertaken by the government in two tranches ensured that spreads of AAA rated bonds of 3-year maturity fell to the lowest levels ever. This created a borrowing binge among Indian corporates.

Most of the funds were raised through the institutional private placement route. Indian companies raised nearly Rs.400,000 crore through the issue of local notes between April and September 2020. This is an all-time record in terms of debt funding in this period.

This debt binge is likely to continue as rates extremely attractive, institutions are flush with funds and looking to deploy and above all, most of the companies are keen to build solid defences for their business with a view to growing back to normal levels.