Corporate bonds public issues in FY24 at a record high

bonds

The number of corporate bonds public issues in the financial year 2023-24 was the highest for any financial year, so far, with the amount raised (Rs 19,167 crore) at a four-year high, the Economic Survey which was released on July 22 said.

Private placements remained the preferred channel for corporates, accounting for 97.8 per cent of total resources mobilised through the bond market, the survey, tabled in Parliament a day ahead of Budget presentation. said.Follow our live blog for the latest on the Economic Survey 2024

In FY24, the value of corporate bond issuances increased to Rs 8.6 lakh crore from Rs 7.6 lakh crore in the previous year.

Increasing investor demand and the rise in the cost of borrowing from banks have made these markets more attractive for corporates for funding requirements. The quantum of outstanding corporate bonds increased by 5.5 per cent YoY to Rs 45 lakh crore (i.e., 15.5 per cent of GDP) at the end of March 2024.

Going forward, the investment needed to steer India’s economic growth has to be through a multitude of financing options beyond bank financing. India needs both banks and capital markets to provide the required finances sourced from a sustained high level of household savings. An active corporate bond market becomes critical in this context, survey said.

It added that an efficient corporate bond market with lower costs and
quicker issuing time can offer an efficient and cost-effective source of longer-term funds for corporates. However, the size of the corporate bond market in India, scaled by GDP, remains small compared to other major Asian emerging markets such as Malaysia, Korea, and China.

The Indian corporate bond market lacks depth since it is dominated by highly-rated issuers and a limited investor base of domestic institutions.