Better rated firms moving to bond mkt, says RBI report Better rated companies are moving to the bond market, even as bank loans continue to remain an efficient financing tool for lower rated firms, the Reserve Bank of India’s financial stability report said. Better rated companies can easily tap the bond market, and their borrowing costs are usually nearer the risk-free rate of sovereign treasury bills, rather than banks’ marginal cost of funds-based lending rate (MCLR). And, there is a significant differential, about 185 basis points between risk-free rates and the bank MCLR. One basis point is a hundredth of a percentage point If the risk-free rate (govt securities) is 6.57 per cent for five-year money, AAA-rated companies, on an average, raise their fund at 7.39 per cent from the market. The bank MCLR is 8.41 per cent for the tenure If a company with A rating has to raise funds from the market, the coupon it has to pay would be 10.2 per cent, according to the RBI. This sho