Corporate bonds

Fundraising by private placement of corporate bonds reached its lowest level in 6 years. Details here

Fundraising through private placement of corporate bonds by listed companies hit a six-year low of around 5.88 lakh crore for FY22 financial year. There was also a decline in the number of issues during the year under review. Demand for these bonds has slowed due to strong equity growth and aggressive fund outflows by banks at lower interest rates.

Data from market regulator Sebi showed that in FY22 there were a total of 1,405 issues on BSE and NSE where listed companies mopped up to 5,88,036.94 crores through private placements of corporate bonds – the lowest since FY 2015-2016.

In FY21, listed companies’ fundraising for corporate bonds was at its highest with 1,995 issues for an amount of 7 71,839.98 crore.

Fundraising in this instrument amounted to 6,74,702.88 crore in FY20, while it was 6 10,317.61 crores in FY19. The fundraiser took place at 5,99,147.08 crore and 6,40,715.51 crore in FY18 and FY17 respectively.

Fundraising in corporate bonds through private placement continued 4,58,073.48 crore in FY16. Although, during this fiscal show was at 2975 on BSE and ESN.

Kamlesh Shah, managing director of Share India Securities, told PTI that the decline in private placement fundraising in FY22 compared to the previous year could be attributed to the good performance of equities. in the stock market last year.

Ricky Kirpalani, Lead Sponsor of First Water Capital Fund (AIF), said: “In FY23 there should be some increase in debt through bonds as Indian companies press on the “pedal of the next major phase of the CAPEX cycle. Further, with a potentially rising interest rate scenario, these bond issuances should attract interest from risk-seeking investors,” the report reported. mentioned news agency.

Currently, a Company Law Committee (CLC) has been formed by the Ministry of Corporate Affairs (MCA) to make recommendations on changes to facilitate and promote greater ease of doing business in the country and improved effective implementation of the Companies Act 2013, the Limited Liability Companies Act 2008 and the rules thereunder.

Anand Lakra, Partner, J Sagar Associates (JSA) on a Company Law Committee Summary Report (2022) said: “The recommendations provide procedural flexibility for companies which would result in broader shareholder engagement and be effective in terms of cost and time The report envisages allowing companies to hold shareholder meetings in electronic/hybrid mode, eliminating affidavits and replacing them with affidavits, keeping records under electronic form and to serve documents on shareholders in electronic form, etc. Such recommendations would make it easier to do business in India and bring best practices from more developed markets.”

“Currently, fractional shares are not permitted to be issued or traded. Given the recent increase in retail shareholder participation in the public markets, this is an excellent recommendation as it would allow retail shareholders to trade in shares that were previously inaccessible.Since the companies Act did not expressly regulate RSUs and SARs, this has led to uncertainty as to their ability to issue such instruments under the relevant regulations from SEBI,” added Anand Lakra.

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