Bharat Bond ETF lists on NSE with overwhelming response by investors

Bharat Bond ETF (Exchange Traded Fund) got listed at the National Stock Exchange with an overwhelming response by the investors. The 3-year category received applications for Rs 6,982 crores and the 10-year category received Rs 5,413 crores. All the subscriptions will be retained in both the categories to accommodate the overwhelming demand. The BHARAT Bond NFO saw wide retail participation with 55,000 investors participating in the NFO, on the back of strong support from digital partners. Though it has been listed at the NSE, the debt ETFs will be traded at the BSE (Bombay Stock Exchange) also. Edelweiss Asset Management Limited announced the Bharat bond ETF listing on 2nd January 2020 citing the initial NFO issue size of Rs 7,000 crore was oversubscribed by nearly 1.8 times.  

Speaking on the Bharat Bond ETF listing Anuradha Thakur, Joint Secretary, Department of Investment and Public Asset Management (DIPAM) said "We are very happy with the success of the Bharat Bond ETF launch. The overwhelming response that the NFO has garnered, gives us the confidence that there will be even higher investor interest for this product and similar issuances in the future. We hope this will open up additional avenues for CPSEs to raise funds, through a new class of investors like retail and foreign portfolio investors." Debt ETFs will create a new ecosystem of market-makers, bringing together high-quality borrowers and investors to the Corporate Bond Market.

See Zee Business Live TV streaming below:

Rashesh Shah, Chairman and CEO, Edelweiss Group said, “I would like to thank DIPAM for giving us the opportunity to launch India’s first Corporate Bond ETF. The launch of the Debt ETF program is the culmination of years of effort by the government, regulators, Edelweiss and partners to create a debt product for retail investors, that is a low cost, is easily accessible through the exchange platform, has transparent pricing and provides the stability of AAA-rated Public Sector Bonds. This unique product has the potential to disrupt the corporate bond markets as no other product has done before."

The product listing on a transparent platform, complemented with market makers bringing in liquidity, will see a high appetite from a new set of investors in the market.  Going forward, the AMC plans issuance of ETFs with 3 year and 10-year target maturities, as well as the issuance of products with other tenors.  The listing of BHARAT Bond ETFs may also encourage the private sector to tap the Bond ETF route to raise capital through target maturity Bond ETFs.

BHARAT Bond will invest only in AAA-rated public sector bonds. The ETF with a 3-year maturity will follow the Nifty BHARAT Bond Index -April 2023 and the one with a 10-year maturity will follow the Nifty BHARAT Bond Index – April 2030. BHARAT Bond ETF combines the best features of Mutual Funds, ETFs and Bonds. It provides safety because it consists of a high-quality basket of public sector companies, as well as liquidity and access to bond markets at a much lower ticket size. BHARAT Bond ETF is also the lowest cost mutual fund product in India.