The corporate bond market has seen significant growth, with private placements raising ₹7.5 lakh crore in FY ’22-23 and ₹4.15 lakh crore in FY’23-24. SEBI’s initiatives and the government’s asset monetization program are expected to further boost retail investor participation.

In the dynamic landscape of the financial markets, the corporate bond market has experienced remarkable expansion. So what are these corporate bonds? For those unaware of the terminology, these bonds are debt instruments that businesses issue to raise money, and investors can expect a set interest income from these bonds.

“In FY ’22-23, private placements garnered an impressive ₹7.5 lakh crore (USD 94 billion), and in the current fiscal year, FY’23-24, we have already witnessed a substantial raise of ₹4.15 lakh crore (USD 52 billion) by October. It’s to be noted that this strong momentum includes obtaining money through private placements,” said Abhijit Roy, CEO, of GoldenPi.

Outlook of Corporate Bonds in 2024

As per Abhijit Roy, pivotal developments are poised to shape the landscape into FY’24-25. “SEBI’s initiative to reduce the ticket size from ₹10 lakh to ₹1 lakh since January 1, 2023, fosters increased retail investor participation which has increased from a mere 0.7% in FY ’22 to 2% in FY’ 23 and is currently at 4% with the potential for further the positive outlook for further increase in the very near future,” Roy said.

Investor interest in corporate bonds

As per CEO, GoldenPi. SEBI’s comprehensive framework for bond settlements in the secondary market via the RFQ route ensures heightened safety and security for retail investors. Simultaneously, the central government’s asset monetization program, in which the PSUs raise substantial funds for national development through the NCD IPO route, anticipates continued active retail participation.

Anshul Gupta, co-founder and chief investment officer, Wint Wealth said there is still a lot of scope to increase the participation of retail investors in the corporate bonds space while protecting their interests. For example, the ticket size of privately placed corporate bonds is still much higher than what more retail investors can afford.

He emphasised on the need for a smaller ticket size of privately placed bonds for retail investors.

On November 20, Reuters reported that Reliance Industries Ltd (RIL), is considering its maiden bond issue with a plan to raise up to ₹10,000 crore.

However, in an exchange filing, the company termed the news as mere speculation. “We wish to clarify that currently, the Company has no plans to raise money by way of bond issuance or otherwise. The news item is speculative. We have always made and will continue to make disclosures in compliance with our obligations under SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, and our agreements with the stock exchanges,” JFS Ltd informed in a filing on November 21, 2023. 

Disclaimer: The views and recommendations made above are those of individual analysts, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.

By Admin

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