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India's corporate bond market has witnessed a phenomenal year, recording an all-time high of Rs 9,97,804 crore (approximately $1.2 trillion) mobilized through private placements in the financial year 2023-24. This represents a 17% increase compared to the previous year, according to data from Primedatabase.com, a leading source of information on India's primary capital market.
This was mobilised by 976 institutions and corporates. Such deals, listed and unlisted, which have a tenor and put/call option of above 365 days have been considered.
This surge in bond issuance comes despite recent tax changes impacting debt mutual funds and expectations of lower borrowing costs in the future, said Pranav Haldea, Managing Director, PRIME Database Group.
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Financial Institutions and Banks Lead the Pack: The highest mobilization came from banks and financial institutions, raising Rs 4,67,995 crore. This reflects an 8 per cent increase compared to the previous year, highlighting their continued reliance on corporate bonds for funding.
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Private Sector Sees Sharp Rise: The private sector (excluding banks and financial institutions) also witnessed a significant increase, mobilizing Rs 4,96,446 crore, which represents a 44 per cent jump compared to FY 2022-23.
Government Entities Maintain Presence: Government entities collectively mobilized 39% of the total amount, showing a slight decrease from 41% in the previous year. As per primedatabase.com, among government entities, All-India Financial Institutions/Banks led with a 91 per cent share followed by a 8 per cent share by PSUs.
Top Issuers: The highest mobilisation through debt private placements during the year was by NABARD (Rs 65,393 crore) followed by REC (Rs 52,140 crore), HDFC (Rs 46,062 crore), PFC (Rs 45,130) and SIDBI (Rs 38,600 crore). The top 5 issuers of 2023-24 raised Rs 2,47,505 crore (or 25 per cent of total) in comparison to Rs 2,48,719 crore (or 29 per cent of total) raised by the top 5 issuers of 2022-23.
Summary by Tenor: Maximum amount of monies was raised in the above 10 year maturity bucket (Rs 3.29 lakh crore or 33 per cent of the total amount) followed by 3-5 years bucket (Rs 2.78 lakh crore or 28 per cent of the total amount).
Summary by Coupon: 56 per cent of the total amount (Rs 5.56 lakh crore) was in 7-8 per cent coupon range and 16 per cent (Rs 1.63 lakh crore) in the 8-9 per cent coupon range.
Summary by Credit Rating: Issues of as much as Rs 6.63 lakh crore or 66 per cent of the overall amount were AAA rated.
Summary by Sector: On an industry-wise basis, the Banking/Financial Services sector continued to dominate the market, collectively raising Rs 7,26,541 crore or 73 per cent of the total amount. Housing/Civil Construction/Real Estate sector ranked a distant second with a 6 per cent share (₹60,426 crore).
433 first-time issuers hit the market in 2023-24 in comparison to 414 last year.
In addition to the above, 17 Infrastructure/Real Estate Investment Trusts (InvITs/ReITs) also privately placed bonds worth Rs 14,155 crore in 2023-24 (2022-23: 9 InvITs/ReITs, Rs 4900 crore).
Public Bonds: Public bonds market saw a near 179 per cent increase with 48 issues raising Rs 20,787 crore in comparison to 32 issues raising Rs 7,444 crore last year. The largest issue was from Power Finance Corp. raising Rs 2,824 crore.
Overseas Bonds: In addition, Indian companies also raised Rs 3.79 lakh crore through overseas borrowing (including ECBs$), up by 71 percent from Rs 2.22 lakh crore in 2022-23.
