Corporate Bond Issuances Via Private Placement At Record High In 2023

Corporate bond issuances through private placement touched an all-time-high in 2023.

The funds mobilised through these bonds stood at Rs 9.58 lakh crore in 2023, up 26% year-on-year, from Rs 7.58 lakh crore, according to Prime Database. The total number of issuers increased to 920 in 2023 from 863 issuers in 2022.

While the private sector led the trend with 59% of the total amount mobilised, government sector lagged at 41%

Of the total, the highest issuances were made by banks that stood at Rs 4.71 lakh crore, up 29% year-on-year.

The recent trend is due to a surge in credit demand, on the back of strong economic growth and constrained liquidity in the banking system.

NDTV Profit previously reported that since the interest rate cycle appears to have peaked in India, there is a growing need to diversify sources of funding. Hence, the issuance of non-convertible debentures has increased.

In terms of tenor, the maxiumum amount of money was raised in the above 10-year maturity bucket. This stood at Rs 3.46 lakh crore, according Prime Database, and was followed by three to five years bucket at Rs 2.67 lakh crore.

Bonds with a 7-8% coupon rate led the show, with 59% of the total amount mobilised through them. This was followed by bonds with 8-9% coupon rate.

Majority or 69% of these issuances were 'AAA' rated and the amount mobilised through them stood at Rs 6.59 lakh crore. Issuances with 'AA+' rating stood at Rs 66,267 crore, while those with 'AA' rating were at Rs 37,708 crore.

The outstanding size of bond market is expected to more than double to Rs 100-120 lakh crore by fiscal 2030, from Rs 43 lakh crore as of the previous fiscal, according to a Crisil Ratings Dec. 4 note.