India’s corporate bond market has evolved significantly over the last decade, expanding from under ₹16 trillion in 2014 to over ₹51.58 trillion in outstanding corporate debt by December 2024. Buoyed by record issuances of ₹9.9 trillion in FY 2025 and projected to reach around ₹11 trillion in FY 2026, the market is witnessing unprecedented growth. However, the dominant mode of issuance remains private placement, accounting for approximately 70% of total corporate bond issuances in recent years. This blog examines the nuances of private placements versus listed corporate bonds, highlighting their advantages, challenges, and suitability for different stakeholders.
The Growth Trajectory of India’s Corporate Bond Market
Between FY 2014 and FY 2025, corporate bond issuances nearly tripled from around ₹3.3 trillion to ₹9.9 trillion, driven by:
- Monetary Easing: The Reserve Bank of India cut the repo rate by 100 basis points between February and June 2025, lowering borrowing costs for issuers.
- Regulatory Reforms: SEBI’s enhanced disclosure norms, market-making frameworks, and unified KYC systems have streamlined both primary and secondary market processes.
- Investor Diversification: Institutional investors (mutual funds, insurance companies, FPIs) remain major participants, while retail access is growing through online bond platforms.
- Credit Quality Improvement: Stronger corporate financials and rating upgrades have reduced risk premia, enabling issuers to tap the market at competitive spreads.
As of March 2025, total outstanding corporate bonds stood at ₹53.6 trillion, representing nearly a quarter of India’s overall bond market stock of ₹226.3 trillion.
Private Placement: The Dominant Issuance Channel
What Is Private Placement?
Private placement involves issuing bonds directly to a select group of institutional investors—such as mutual funds, insurance companies, banks, pension funds, and high-net-worth individuals—without a public offering. These bonds may be listed for trading but are not marketed to the broader public.
Key Characteristics
- Customised Terms: Issuers can negotiate covenants, tenors, and coupon structures with investors, tailoring bonds to specific financing needs.
- Lower Issuance Costs: Reduced underwriting fees and limited marketing expenses make private placements cost-effective, especially for large issues.
- Faster Execution: Streamlined documentation and fewer regulatory hurdles enable issuers to raise capital quickly.
- Confidentiality: Limited disclosure requirements relative to public issues protect sensitive corporate information.
- Investor Base: Primarily institutional, ensuring large-ticket subscriptions and minimising distribution risk.
• Dominance: Private placements constituted around 70% of corporate bond issuances in FY 2025 and Q1 FY 2026, amounting to roughly ₹6.9 trillion out of the total ₹9.9 trillion.
• Q1 FY 2026 Performance: Indian corporates raised ₹2.79 trillion through private placements between April and June 2025, underscoring continued investor appetite.
• Issuer Profile: Blue-chip companies and mid-sized corporates increasingly leverage private placements to diversify funding sources away from bank borrowings.
Advantages for Issuers
- Speed and Certainty: Quick closures reduce interest rate risk and funding gaps.
- Cost Efficiency: Savings on underwriting and marketing fees.
- Flexibility: Ability to tailor bond features to meet specific covenant and repayment structures.
- Relationship Building: Direct negotiations with anchor investors can foster long-term partnerships.
Considerations for Investors
- Attractive Yields: Private placement yields often include additional spreads over public bonds due to limited liquidity.
- Covenant Protection: Negotiated covenants can offer stronger protection against credit events.
- Limited Liquidity: Despite listing, trading volumes remain low, with average monthly turnover at just 3.8% of outstanding value.
Listed Corporate Bonds: Liquidity and Transparency
What Are Listed Bonds?
Listed corporate bonds are issued publicly and made available on exchanges such as NSE and BSE. They are tradable instruments, allowing investors to buy and sell bonds on the secondary market.
Key Characteristics
- Broad Distribution: Public offerings open to retail investors, mutual funds, and FPIs.
- Standardised Documentation: Prospectuses and offer documents adhere to SEBI’s stringent disclosure requirements.
- Secondary Market Liquidity: Listing facilitates price discovery and trade execution, albeit still limited in India.
- Transparency: Enhanced disclosure via exchange filings and continuous reporting obligations.
- Rising Issuance: Public issuances, though a smaller fraction compared to private placements, are gradually increasing as regulatory reforms reduce barriers.
- Investor Access: Retail participation, currently below 2% of corporate bond holdings, is expanding via digital platforms and lowered minimum investment thresholds.
- Market-Making Initiatives: SEBI’s push for dedicated market makers aims to narrow bid-ask spreads and improve tradability.
Advantages for Investors
- Liquidity Potential: Exchange trading offers exit options and real-time price discovery.
- Accessibility: Retail investors can participate through demat-based trading and online platforms.
- Transparency and Oversight: Public issuers must meet continuous disclosure norms, fostering investor confidence.
- Standardised Instruments: Homogeneous bond features simplify portfolio construction and benchmarking.
Considerations for Issuers
- Higher Costs: Underwriting fees, listing expenses, and marketing costs are typically higher than private placements.
- Longer Timelines: Public offerings involve extensive due diligence, regulatory approvals, and roadshows.
- Market Conditions: Successful public issuances depend on favourable market sentiment and investor appetite.
Comparative Analysis
| Feature | Private Placement | Listed Corporate Bonds |
| Investor Base | Institutional investors (MFs, insurance, banks) | Retail, mutual funds, FPIs, NRIs |
| Issuance Cost | Lower (fewer fees, limited marketing) | Higher (underwriting, roadshows, listing fees) |
| Execution Speed | Fast (streamlined process) | Slower (regulatory approvals, marketing) |
| Customisation | High (negotiable covenants, tenors) | Low (standardised terms, prospectus norms) |
| Liquidity | Limited (3.8% monthly turnover) | Higher (exchange-based trading) |
| Disclosure Requirements | Moderate (institutional reporting) | Extensive (prospectus, continuous disclosures) |
| Minimum Investment Ticket | High (₹1 lakh and above) | Lower (as low as ₹10,000 via platforms) |
Emerging Online Bond Platforms: Altifi
Digital intermediaries are democratising access to fixed-income instruments. Altifi, a retail debt platform by Northern Arc Securities, has emerged as a notable option, with a community of over 58,979 registered users and facilitating investments of over ₹12.20 billion in corporate bonds and other debt securities.
Altifi’s platform advantages include:
- User-Friendly Interface: Simplified digital onboarding with instant KYC and intuitive bond discovery.
- Curated Offerings: Access to high-quality, rated corporate bonds with tenures and coupon structures tailored for retail investors.
- Real-Time Insights: Market data, expert analyses, and portfolio monitoring tools enable informed decision-making.
- Low Minimum Investments: Starting ticket sizes as low as ₹10,000, opening bonds to new segments.
- Zero Transaction Fees: No charges on purchases to enhance net yields.
As India moves towards broader retail participation, platforms like Altifi are poised to bridge the gap between institutional-grade debt offerings and individual investors, fostering deeper market penetration.
Strategic Considerations for Issuers and Investors
For Issuers
- Assess Funding Needs: Use private placements for large, bespoke funding requirements with minimal time-to-market.
- Balance Between Channels: Consider hybrid structures—anchor private placements followed by a public listing tranche to enhance liquidity.
- Cost-Benefit Analysis: Weigh lower issuance costs of private deals against the broader investor base and pricing benefits of public offerings.
- Regulatory Planning: Leverage SEBI’s reforms—adopt e-bidding, unified KYC, and disclosure frameworks to optimize issuance.
For Investors
- Portfolio Diversification: Combine private placement exposures for yield enhancement with listed bonds for liquidity.
- Credit Assessment: Conduct rigorous due diligence; negotiate covenants in private deals and monitor continuous disclosures for public bonds.
- Liquidity Management: Align investment tenors with liquidity needs, considering limited secondary markets for private placements.
- Platform Utilisation: Evaluate online platforms like Altifi for seamless access, lower ticket sizes, and comprehensive analytics.
Outlook for 2026
India’s corporate bond market is expected to sustain its growth trajectory, with total issuances in FY 2026 approaching ₹11 trillion. Continued monetary easing, regulatory reforms, and fintech innovations will underpin this expansion. Private placement is likely to retain its dominance, while listed bonds and digital platforms will drive incremental retail participation and market depth. Strategic issuance and investment decisions—grounded in a clear understanding of the trade-offs between private and public channels—will be pivotal to unlocking the full potential of India’s ₹11 trillion corporate bond market.
