Introduction
Ever wondered why companies issue corporate bonds instead of taking loans? Corporate bonds are a strategic financing tool for many Indian businesses looking to fund expansion, refinance debt, or manage working capital. In this blog, we’ll explore real-world case studies of Indian corporates using bonds—how they structured them, why they did it, and what investors gained.
Case Study 1: Reliance Industries Ltd. (RIL)
Bond Type: ₹10,000 crore public issue of secured, redeemable, non-convertible debentures (NCDs)
Use Case: Refinancing existing debt and funding capex
Why It Mattered:
RIL used its AAA-rated credibility to offer investors a safe yet high-yield alternative to bank FDs.
The issue was oversubscribed, reflecting strong investor trust.
Investors earned steady returns, while RIL optimized its debt cost.
Takeaway: Large, reputed firms often use bonds for flexibility and lower cost versus traditional loans.
Case Study 2: Tata Capital Financial Services Ltd.
Bond Type: Retail-targeted NCDs with multiple tenure and interest rate options
Use Case: Business expansion in consumer and SME lending
Highlights:
Offered tenures from 3 to 10 years
Coupon options included annual, monthly, and cumulative interest
Attracted both institutional and retail investors
Takeaway: Customizable bond structures help issuers meet diverse investor needs while raising long-term funds.
Case Study 3: Power Finance Corporation (PFC)
Bond Type: Tax-free infrastructure bonds
Use Case: Long-term funding for national power infrastructure projects
Features:
Interest income was tax-free under Section 10(15)
Bonds had tenures of 10–15 years with fixed interest (around 7–8%)
Takeaway: Government-backed entities use bonds to finance public infrastructure while offering retail investors safe, tax-efficient returns.
Case Study 4: Muthoot Finance Ltd.
Bond Type: High-yield NCDs aimed at retail investors
Use Case: Funding gold loan disbursements
Key Points:
Coupon rates as high as 9.5–10% to attract risk-tolerant investors
Rated A+/AA-, reflecting moderate risk
Allowed small ticket size investments (₹10,000+)
Takeaway: Smaller NBFCs may offer higher interest to compensate for credit risk—making due diligence critical for investors.
Case Study 5: Bharat Bond ETF by Edelweiss AMC
Bond Type: Target maturity ETFs composed of AAA-rated PSU bonds
Use Case: Pooled infrastructure capital for public sector enterprises
What Made It Unique:
Provided easy access to PSU bond exposure through a mutual fund-like format
Offered predictable yield-to-maturity with daily liquidity
Very low expense ratio (~0.0005%)
Takeaway: Innovation in bond structures (ETFs) can democratize access to high-quality corporate debt.
What These Case Studies Teach Us
Insight | Explanation |
Issuer Quality Matters | High-rated companies typically have stronger repayment ability and attract more investors |
Purpose Drives Structure | Bonds are tailored based on capital needs—working capital, infra, or refinancing |
Retail Focus is Growing | Many issues are now structured to attract everyday investors with low entry points |
Due Diligence Pays Off | Assess ratings, coupon structure, and use of proceeds before investing |
Final Thoughts
These case studies reveal how Indian corporates—from blue-chip giants to fast-growing NBFCs—use bonds as powerful funding tools. For investors, corporate bonds offer a window into the growth engine of the economy, enabling them to earn while companies expand.
By understanding issuer strategies, credit risk, and bond structures, you can invest not just in a company—but in India’s growth story itself.
