India's corporate bond market is experiencing a significant pivot, with exchange-listed debt instruments poised to reclaim their dominance over unlisted private placements. A combination of regulatory nudges, evolving investor preferences, and stronger market infrastructure is compelling issuers to opt for the transparency of listed securities, a trend experts believe is set to accelerate in 2026 and beyond.
The Data Behind the Shift
According to data from Primedatabase.com, companies have raised a substantial ₹8.66 trillion through listed bonds in 2025, up until 9 December. This figure is swiftly approaching the total of ₹9.3 trillion recorded for the entire calendar year of 2024. In contrast, fundraising via unlisted bonds stood at ₹2 trillion this year, a slight increase from ₹1.9 trillion in 2024.
While unlisted bonds have gained approximately 200 basis points in market share within the broader bond market this year—rising from 16.8% in 2024 to 18.8% in 2025—the overwhelming bulk of issuances continues to be in the listed space. Market participants are optimistic that listed debt will grow at a faster pace moving forward.
Driving Forces: Regulation and Investor Appetite
Pranav Haldea, Managing Director of Prime Database Group, attributes the steady rise in listed bond issuances to specific regulatory measures. Key among these are rules that channel investments from domestic mutual funds towards listed debt rather than unlisted paper. This has created a reliable demand pool for transparent instruments.
Simultaneously, the unlisted space is being fueled by the rise of private credit funds. For high-net-worth individuals and institutional investors seeking higher yields and willing to accept higher risk and lower liquidity, unlisted bonds from lower-rated issuers remain attractive. Venkatkrishnan Srinivasan, founder of Rockfort Fincap, clarified that a previous decline in the count of listed bond deals was a regulatory artifact. The Securities and Exchange Board of India (SEBI) tightened rules for creating ISINs (International Securities Identification Numbers), encouraging issuers to consolidate multiple tranches under fewer, more liquid ISINs.
"Tighter ISIN norms and a growing policy focus on building liquid, tradable bond markets have further pushed issuers toward listed formats," Srinivasan said.
A Maturing Market Ecosystem
The shift signifies a coming-of-age for India's credit markets. Issuers are increasingly embracing market-linked funding to diversify away from bank dependence. Chirag Doshi, Executive Director and CIO–Fixed Income at LGT Wealth India, highlighted the advantages: broader investor distribution, lower refinancing risk, and better visibility with institutional players who require standardized documentation and transparent pricing.
Technological advancements in market infrastructure have been crucial. The adoption of the Electronic Bidding Platform, interoperable clearing, Request for Quote platforms, and online bond marketplaces has significantly reduced friction in both issuance and trading. As execution risks and costs decline, even issuers traditionally reliant on private deals are exploring the listed route.
Global investors are also contributing to this trend. Increasing allocations to India, driven by inclusion in global indices and stronger ESG frameworks, reinforce the need for transparent and accessible bond instruments. However, challenges remain. Tanveer Sethi, Investment Manager at Kotak Mahindra Asset Management (Singapore), noted that foreign portfolio investors (FPIs) remain wary of volatility in the Indian rupee, with stability hinging on a neutral current account.
Lingering Challenges and the Road Ahead
Despite robust primary issuance, secondary market liquidity remains a friction point. Doshi pointed out that large portions of bonds are held by insurers and pension funds with 'hold-to-maturity' strategies, limiting the tradable float. "FPIs are not deterred by India’s macro story–they simply want an environment where they can scale positions without liquidity slippage," he explained.
Nevertheless, the consensus among industry experts is that the move towards listed bonds is structural. While issuance volumes will naturally fluctuate with interest rate cycles, sustained improvements in regulation, transparency, and investor sophistication suggest that listed bonds will increasingly form the core of corporate funding in India. This cycle of price discovery and repricing is a hallmark of a deepening and healthy bond market, one that is becoming more evident in India's financial landscape.
