By Rajesh Kurup & Kishor Kadam
In a year when the global markets took a knock due to the Russia-Ukraine war and fears of recession, Indian corporates were able to raise Rs 8.84 trillion through rupee bonds – marginally down from Rs 8.86 trillion raised in FY22. A total of 365 companies mopped up funds through bonds in FY23, some of them repeatedly tapping the capital markets during the year.
This compares with Rs 9.90 trillion IND Inc had raised via bonds in FY21, which was also the highest in the last five years. In FY20, Rs 6.19 trillion was raised and Rs 4.49 trillion was mopped up in FY19.
HDFC topped the chart with Rs 78,415-crore fundraise through issuance of bonds during the year under review, followed by Power Finance Corporation (Rs 45,097 crore), Nabard (Rs 49,510 crore), State Bank of India (Rs 38,851 crore), REC (Rs 37,705 crore), SIDBI (Rs 35,405 crore), Indian Railway Finance Corp (Rs 29,559 crore) and HDFC Bank (Rs 23,000 crore), according to data sourced from Bloomberg.
“The lacklustre interest by corporates in raising funds through bonds was mainly due to the rise in interest rates during the financial year, while a rise in global inflation rates also played its part. Due to these factors, raising funds through fresh issuance of bonds would have been comparatively costlier, which also made corporates adopt a wait-and-watch approach. During the fiscal, corporates stayed away from making real investments, while funds were raised only for refinancing,” Mahesh Singhi, founder & MD at investment banking firm Singhi Advisors, said.
“With these issues still hovering, we don’t expect much fundraising through bonds to happen in FY24. The traditional way of borrowing from banks would be the preferred mode,” Singhi added.
In FY23, the RBI raised benchmark lending rates by 250 bps.
“In FY23, despite the rate hikes, banking channels were offering loans at rates much below the corporate bond rates. The credit growth of banks has been hovering at 15-16%. Drying up of market liquidity, coupled with slower pace of deposit mobilisation growth, has resulted in transmission of rates by banks, the impact of which will be seen in FY24. The reduction in corporate tax rates during the last couple of years has helped companies to accrue more cash and de-leverage significantly — it has resulted in strengthening of their balance sheets, thereby enhancing their credit rating, making them more attractive for bond market issuance for their next phase of inevitable growth,” Vinay Pai, head (fixed income) at Equirus, said.
December 2022 witnessed the highest fundraise in FY23 at Rs 1.43 trillion, followed by March 2023 (Rs 1.11 trillion), November (Rs 92,565 crore), September (Rs 92,533 crore) and February 2023 (Rs 86,087 crore).