InvestorQ : Why have Indian companies been so aggressive in raising funds through bonds this year?
Archita Jajjoo made post

Why have Indian companies been so aggressive in raising funds through bonds this year?

Answer
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Niti Shenoi answered.
2 months ago


The current financial year, despite the menace of COVID, has been a robust year for bond issues. It has surely remained the season of bonds with Indian corporates raising Rs.257,000 crore by way of issue of bonds on a private placement basis in the Apr-Jul period.

This figure is nearly 22% higher on a YOY basis, which is a great achievement considering this was the peak COVID period. It was due to the volatility in the equity market that most of the Indian companies opted to raise funds through the debt route.

In terms of statistics, the number of issues at 608 was lower compared to 697 issues last year, largely on account of bigger ticket sizes this year. However, the major fund raisers during the Apr-Jun period were financial companies like banks and NBFCs.

Most financials want to ensure a smooth transition to the post moratorium period, once it is withdrawn. Indian listed companies raised Rs.675,000 crore via issue of bonds during fiscal year 2019-20, and more than 40% of that amount was raised in first 4 months.

The bigger take-away from the story is that there is still an appetite for quality paper. Of course, the fund raising was done largely by mega private banks and large corporates that have access to low cost funding. But funds are certainly available.