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Indian companies have mopped up a staggering Rs 3.5 lakh crore in 2012-13, the highest in 12 years, through private issuance of debt securities 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.
"2012-13 witnessed a mobilisation through corporate bonds on private placement basis of Rs 3,51,848 crore, significantly higher than the preceding year's mobilisation of Rs 2,52,564 crore," according to market research firm Prime Database.
This was the highest amount of funds raised by companies through debt private placement since 2001-02, when they had garnered Rs 45,427 crore.
Market experts said Indian firms opted to raise capital from the private placement of debt route to take advantage of the interest rate differential between bank loans and such bonds and a weak Indian rupee.
Another factor for higher debt private placements could be increased investment limits in bonds for Foreign Institutional Investors (FIIs) and simple disclosure norms.
The Indian rupee is among the worst-performing currencies among emerging markets in 2012-13, losing 6.72%.
The government had increased FII limits in government securities and corporate bonds by $5 billion each, taking the total investment limit in domestic debt to $75 billion.
Besides, the market regulator allowed companies multiple rounds of fund raising through debt route within 180 days by filing the prospectus only once.
As per Prime Database, the biggest mobilisation was made by financial Institutions and banks at Rs 1.85 lakh crore in 2012-13, up 15% from the preceding year.
Mobilisation of funds by the private sector firms jumped by 93% to Rs 1.14 lakh crore in 2012-13, while funds raised by public sector companies also rose up to Rs 39,551 crore in 2012-13 from Rs 27,176 crore in the previous fiscal.
Besides, mobilisation by state-run financial institutions went up to Rs 5,394 crore against Rs 1,575 crore raised in 2011-12, while funds raised by state level undertakings rose more than two times to Rs 8,584 crore.
"Government organisations and financial institutions, put together, mobilised 68% of the total amount, down from 77% in the previous year," the report noted.
As per Prime Database, among government organisations, national level financial institutions or banks led with a 52% share, followed by a 11% share by PSUs and 2% each by state level undertakings and financial institutions of states.
The highest mobilisation through debt private placements during the period was by HDFC (Rs 33,180 crore), followed by PFC (Rs 30,277 crore), REC (Rs 21,782 crore), Nabard (Rs 17,414 crore), LIC Housing (Rs 15,656 crore), IDFC (Rs 11,329 crore) and Exim Bank (Rs 10,617 crore).
