Indian Companies Break Records: Raising a Whopping Rs 9.58 Lakh Crore in 2023

India's corporate sector witnessed a remarkable surge in fund mobilization through the market in 2023, with a record-breaking Rs 9.58 lakh crore raised, marking a significant 26% increase compared to the previous year. This notable growth highlights the resilience and adaptability of Indian businesses amidst various economic challenges.

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Key Highlights of Corporate Bond Market in 2023

The data compiled by Primedatabase reveals several key trends in the corporate bond market during 2023:

• Increased Issuance: The number of issuers tapping the market increased from 863 in 2022 to 920 in 2023, indicating a growing preference for debt financing.
• Diversified Issuer Base: The data encompasses both listed and unlisted debt instruments with a tenor and put/call option exceeding 365 days, providing a comprehensive view of the market.
• Banking Sector Dominance: Financial institutions and banks emerged as the largest borrowers, raising Rs 4.72 lakh crore, a substantial 29% increase from the previous year.
• Private Sector Growth: The private sector also witnessed a significant 40% rise in fund mobilization, garnering Rs 4.45 lakh crore compared to Rs 3.18 lakh crore in 2022.
• Government Entities' Contribution: Government entities accounted for 41% of the total amount raised, reflecting their continued reliance on debt financing.

Top Issuers and Coupon Trends

HDFC emerged as the largest issuer in 2023, raising an impressive Rs 74,062 crore, followed by NABARD (Rs 63,164 crore), PFC (Rs 52,575 crore), REC (Rs 51,354 crore), and SBI (Rs 51,080 crore). Collectively, these top five issuers accounted for 31% of the total funds raised, surpassing the 26% share held by the top five issuers in 2022.

In terms of coupon rates, a significant portion (59%) of the funds raised fell within the 7-8% coupon range, while 16% were in the 8-9% range. This indicates a preference for moderately higher yields among investors.

First-Time Issuers and Public Bonds

The year 2023 witnessed a notable increase in the number of first-time issuers entering the market, with 404 new entrants compared to 408 in the previous year. This trend reflects the growing confidence of businesses in accessing debt financing.

Public bonds also experienced a significant surge, with 44 issues raising Rs 18,176 crore, marking a substantial 175% increase compared to 2022. Power Finance Corp emerged as the largest issuer in this category, raising Rs 2,824 crore.

Overseas Debt Financing

In addition to domestic market borrowings, Indian companies also raised Rs 3.29 lakh crore through overseas debt instruments, including External Commercial Borrowings (ECBs). This represents a 4% increase compared to 2022, indicating the continued importance of international funding sources.

India Inc's impressive performance in the corporate bond market during 2023 underscores the resilience and adaptability of Indian businesses in navigating economic challenges. The surge in fund mobilization reflects the growing confidence of investors in the Indian economy and the effectiveness of debt financing as a means of capital formation. As the market continues to evolve, it will be interesting to observe how these trends shape the corporate landscape in the coming years.