In FY24, bond issuance reached a record high of Rs 9.98 lakh crore due to short-term financial demands

Bond issuances (mostly through the private placement route) reached an all-time high in FY24 at Rs 9.98 trillion (Rs 9.98 lakh cr), up from Rs 8.52 trillion in the previous fiscal year. This is because companies are increasingly relying on the less onerous private debt market for their short- to medium-term funding needs, even though the largest issuer, HDFC, exited the debt market following its merger in July.

Data compiled by Primedatabase, which offers information on the main capital market, indicates that in fiscal 2024, 975 issuers raised an unprecedented amount of money via the private placement of corporate bonds, totaling Rs 9.98 trillion. This represents a rise of more than 17% from the previous year. The information is based on bonds having a tenor and put/call option of more than 365 days, both listed and unlisted.

Only Rs 20,787 crore of the total came from public bonds, a 179% increase over the previous year from 48 offerings, compared to 32 issues that raised Rs 7,444 crore in FY23. With Rs 2,824 crore, Power Finance Corp. had the biggest problem. Furthermore, local businesses were able to raise Rs 3.79 lakh crore (up 71% from Rs 2.22 lakh crore in FY23) via foreign borrowings (including ECBs).

The record debt figures, according to Pranav Haldea, Managing Director of Prime Database Group, are the result of strong economic growth driving up credit demand. As usual, financial institutions led the mobilization at Rs 4.68 lakh crore, up 8% from Rs 4.34 lakh crore in FY23. However, the private sector also accrued greater debt, reaching Rs 4.96 lakh crore this year as opposed to Rs 3.44 lakh crore in FY23, a 44% increase from the previous year.

The amount of debt raised in FY20, FY22, and FY23 of the previous year was Rs 6.74 lakh crore, Rs 7.54 lakh crore, and Rs 6.35 lakh crore. Together, the public sector raised 39% of the total debt, down from 41% in FY23. Banks had the largest proportion of all government entities—91 percent—followed by other central units, which held an 8% share.

The public sector developmental lender Nabard led the mobilisation chart for the year with Rs 65,393 crore mop-up after HDFC left the market following the reverse merger that took effect on July 1, 2023. REC came in second with Rs 52,140 crore, HDFC (up to June 2023 at Rs 46,062 cr), PFC (Rs 45,130 cr), and Sidbi (Rs 38,600 cr). Approximately Rs 2.47 lakh crore, or 25% of the total, was raised by these five biggest issuers.

The bucket with the above 10-year maturity raised the most money (3.29 lakh crore, or 33% of the total), followed by the bucket with the 3-5 years (Rs 2.78 lakh crore, or 28% of the total). Coupons, or the effective interest given to investors, ranged from 7 to 9% on average for up to 56% of the entire amount, or Rs 5.56 lakh crore, and from 8 to 9% for the remaining 16%, or Rs 1.63 lakh crore.