 "Debt, Tax rate, Investment, Treaty")
Indian companies garnered close to Rs 6 lakh crore through private placement of corporate bonds in 2016, a surge of 25 per cent, to fund business expansion plans.
According to the data with Securities and Exchange Board of India (Sebi), firms raised Rs 5,95,627 crore from corporate bonds on a private placement basis between January and December 2016, as compared to Rs 4,76,311 crore mopped-up in the preceding year.
In terms of numbers, a total of 3,366 issues were made in 2016 as compared to 2,953 in the year 2015.
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August proved to be the most fruitful month for the firms as they raked in Rs 71,165 crore through 375 issues via this route.
Most of the funds have been raised mainly for expansion of business plans and to support working capital requirements.
"Fund raising from capital markets is a function of cost and availability of capital. High volatility, weak sentiments in equity markets and lower cost for raising funds via debt encouraged firms to raise capital through private and public bond issues instead of equity issues," Bajaj Capital Senior VP and Head (Investment Analytics) Alok Agarwala said.
"At the same time, there were many regulatory initiatives for deepening Indian bond markets such as banks being allowed to issue Additional Tier 1 Bonds to meet their capital requirement, investment limit for Foreign Portfolio Investors being increased and withholding tax rate being reduced from 20 per cent to 5 per cent. These factors contributed tremendously to capital raising via debt route," he added.
