Listed companies have mopped up a staggering Rs 3.36 lakh crore -- the highest in five years -- through private issuance of debt securities in 2012 as relaxed norms and weak rupee increased the appetite of corporates.
In debt private placements, firms issue debt securities or bonds to institutional investors to raise capital.
According to data available with market regulator Sebi (Securities and Exchange Board of India), listed Indian firms raised a total of Rs 3,36,396 crore in 2012 through private placement of debt securities, a robust hike from Rs 2,10,869 crore garnered in the preceding year.
Data for funds mopped up before 2007 by listed Indian companies via private placement of debt securities is not available. In 2007, Rs 1.05 lakh crore was raised via this route.
In 2012, the number of issuances stood at 2,338 from 1,509 in the preceding year.
Market experts believe companies have opted for private placement of debt route for raising funds because of various factors such as increased investment limits in bonds for Foreign Institutional Investors (FIIs), simple disclosure norms and a weak rupee.
"The steps taken by Sebi are positive as the higher debt private placements could be the interest of FIIs," Geojit BNP Paribas Research Head Alex Mathew said.
The government has increased FII limits in government securities and corporate bonds by USD 5 billion each, taking the total investment limit in domestic debt to $75 billion.
In October, the market regulator allowed companies multiple rounds of fund raising through debt route within 180 days by filing the prospectus only once.
"Indian currency which is hovering around the 55-level has also helped FIIs to stay invested in the domestic market," CNI Research Head Kishor Ostwal said.
The weak local currency was another major reason for FIIs to invest in debt instruments as they can earn more if the currency depreciates against the dollar. The rupee had depreciated about 3.5% in 2012.