Fund mobilisation through private bond placements hit all-time high in 2023

Fund mobilisation through private placement bonds reached an all-time high of Rs 9.58 trillion in 2023, marking a 26 per cent increase from the previous year, according to a release by Prime Database.

Pranav Haldea, managing director of Prime Database Group, attributed the upswing to a surge in credit demand propelled by robust economic growth. Concurrently, the banking system faced liquidity constraints, compelling entities to explore alternative avenues for capital infusion, the release stated.

The highest mobilisation in 2023 came from All-India Financial Institutions and banks, accounting for Rs 4.71 trillion, representing a 29 per cent increase from the previous year's Rs 3.66 trillion. The private sector (excluding banks/financial institutions) witnessed a staggering 40 per cent surge, mobilising Rs 4.45 trillion compared to Rs 3.18 trillion in 2022.

Government entities played a pivotal role, collectively mobilising 41 per cent of the total amount, surpassing the 38 per cent recorded in 2022. Among government entities, All-India Financial Institutions/Banks led with an 89 per cent share, followed by a 9 per cent share by public sector undertakings.

HDFC emerged as the frontrunner in fund mobilisation, raising Rs 74,062 crore, followed closely by NABARD (Rs 63,164 crore), PFC (Rs 52,575 crore), REC (Rs 51,354 crore), and SBI (Rs 51,080 crore). The top five issuers collectively raised Rs 2.92 trillion, constituting 31 per cent of the total, compared to Rs 1.96 trillion, which was 26 per cent of the total amount raised by the top five issuers in 2022.

The majority of funds, amounting to Rs 3.46 trillion (36 per cent of the total), were raised in the above 10-year maturity bucket. In terms of coupon ranges, 59 per cent of the total amount (Rs 5.61 trillion) fell within the 7-8 per cent range, while 16 per cent (Rs 1.55 trillion) fell in the 8-9 per cent range. Notably, 69 per cent of the total amount raised was AAA-rated.

The banking/financial services sector maintained its dominance, collectively raising Rs 7.07 trillion or 74 per cent of the total amount. The housing/civil construction/real estate sector secured a distant second place with a 6 per cent share, amounting to Rs 55,379 crore.

In 2023, 404 first-time issuers entered the market, slightly down from the 408 recorded in the previous year. The public bonds market witnessed a substantial 175 per cent increase, with 44 issues raising Rs 18,176 crore, compared to 29 issues raising Rs 6,611 crore in 2022. The largest issue in this category was from Power Finance Corporation, raising Rs 2,824 crore.

Indian companies also made significant strides in overseas fundraising, raising Rs 3.29 trillion through overseas borrowing, marking a 4 per cent increase from Rs 3.18 trillion in 2022.