Corporate Bond Issuance Process: How Companies Raise Debt Capital

When a company needs funds, it faces a choice: borrow from a bank or borrow from the market. Increasingly, Indian firms are choosing the second route — issuing corporate bonds. It’s cheaper, often quicker, and gives them direct access to investors. Understanding the corporate bond issuance process helps explain how savings quietly turn into business expansion across the country.

A corporate bond works like a formal loan but with more structure. Instead of a single lender, the company raises money from several investors. It promises to pay interest — the coupon — at regular intervals and return the principal when the bond matures. Everything about the bond is defined beforehand: the interest rate, the tenure, and even what happens if payments are delayed. This predictability is why bonds appeal to both sides — investors know what they’ll earn, and companies know what they’ll owe.

The corporate bond issuance process starts much earlier than the first investor ever hears about it. The company begins by deciding how much money it needs and for how long. Then comes the crucial question — should it issue bonds through a public offering or a private placement? Public issues invite participation from retail and institutional investors alike but require more paperwork and regulatory compliance. Private placements, in contrast, are faster and targeted at institutional buyers, which is why most Indian companies prefer them.

Before an issue goes public, the company must get a credit rating. Agencies like CRISIL, ICRA, or CARE study the issuer’s financials, management quality, and repayment capacity before assigning a rating — ‘AAA’, ‘AA’, or lower. These ratings determine the bond’s cost. Higher-rated issuers can raise funds at lower interest rates, while companies with moderate ratings need to offer higher yields to attract investors. This step is not a mere formality; it builds trust and shapes the entire pricing strategy.

Once rated, arrangers or merchant bankers come into play. They structure the bond issue — deciding on the coupon rate, maturity period, and whether the bond will be secured or unsecured. Secured bonds are backed by tangible assets, while unsecured ones rely purely on the company’s credit profile. An Information Memorandum is then drafted, containing every detail about the issue — from financial data and risk factors to repayment terms. SEBI mandates this disclosure so investors know exactly what they’re buying.

Listing adds another layer of transparency. Bonds issued to the public must be listed on recognised stock exchanges like NSE or BSE. Listing enables trading and price discovery in the secondary market. And thanks to SEBI’s Online Bond Platform Provider (OBPP) framework, even retail investors can now access these listed bonds directly through digital platforms. It’s a big shift — one that’s slowly turning India’s bond market from institutional to inclusive.

After the issue is closed, settlement follows. Usually, this happens on a T+1 basis — within one working day. Clearing corporations like NSCCL or ICCL handle the exchange of funds and bond units, ensuring everything moves through regulated channels. Trustees, often financial institutions, are appointed to safeguard investor interests and make sure the issuer sticks to the agreed terms — timely payments, compliance with covenants, and disclosure of material changes.

Over the past few years, the corporate bond issuance process has grown faster and more transparent. SEBI’s reforms on disclosure and RBI’s efforts to support secondary market activity have made bonds easier to issue and trade. For companies, this means access to cheaper, long-term funds; for investors, it means reliable income backed by regulation and clarity.

At its core, issuing corporate bonds is about connection — linking savers and businesses in a disciplined, rule-based system. Every bond sold funds a project, builds a plant, or supports an idea. That’s how quiet paperwork turns into economic growth, one issuance at a time.