Public issues of corporate bond surge to a four-year high: Report

livemint.com:

Business Standard reported. As of November 2023, companies and financial institutions raised ~13,742 crore through public issues of non-convertible debentures (NCDs), the highest since 2019-20, when ~15,068 crore was raised, according to the Securities and Exchange Board of India (Sebi) data. As of November, Power Finance Corporation raised the highest amount — ~2,824 crore.

Last financial year, there were issues of ~9,211 crore. Market participants said the issues might touch ~20,000 crore by the end of March. Retail and high-net-worth (HNI) investors are increasingly gravitating towards public issues of bonds, they added.

A factor in this is the perceived lack of issuer information in private placement, particularly when investors take part in secondary-market transactions. Additionally, public issues fall under the direct watch of Sebi, providing an added layer of security. Significantly, public bond issues are backed by collateral, enhancing the appeal for risk-conscious investors.

The noticeable surge in demand from retail investors for bond instruments has been attributed primarily to changes in tax laws, affecting medium-term note issuances and debt mutual funds. Retail investors and HNIs are actively seeking alternative investment opportunities that promise returns higher than traditional avenues like banks. “Most of the issuers who tap the public market are with a lower credit rating and they find it difficult to garner a large amount through private placement.