Volatility in the equity market is making Indian companies go for the debt route to raise funds, as the companies raised a whopping Rs 40,500 crore through private placement of bonds in the first two months of the current fiscal, a 43 per cent jump over the year-ago period.
The companies, which are listed on the National Stock Exchange and the Bombay Stock Exchange, have garnered Rs 40,488.45 crore in April-May, 2010, through issuing 251 such bonds. Listed companies had raised Rs 28,239 crore through issue of bonds in the same period last year, according to the data available with market regulator Sebi.
"The fund raising activity among the companies is picking up as the markets are recovering from its last year lows. But, the equity markets are trading under pressure. The companies are in need of capital and bonds being a more secured options they are raising money through these routes," SMC Capitals Equity Head Jagannadham Thunuguntla said.
Corporate bonds are long-term debt instruments issued by private companies to raise funds for expansion of business.
The firms have raised Rs 16,514.18 crore through issuing 139 such bonds in April and the growth trend continued in May also with companies raising Rs 23,974.27 crore through issuing 112 bonds.
In all, there were 251 issuance of privately placed corporate bonds during April-May, up from 123 in the same period of previous fiscal.
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The BSE benchmark Sensex, during the period under review, fell by 583.14 points, or 3.32 per cent, to settle at 16,944.63 points on May 31.
During the calender year till May, the listed companies have raised a staggering Rs 1.14 lakh crore by 681 bond issues, against Rs 91,772.46 crore through 390 bond issues during the same year-ago period.
Companies had raised over Rs 2.12 lakh crore through corporate bonds in FY10 compared to Rs 1.73 lakh crore raised through corporate bonds during 2008-09.