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Edelweiss Asset Management has listed the first ever Corporate Bond Exchange Traded Fund (ETF), the BHARAT Bond ETF, on the National Stock Exchange and BSE.
The product listing on a transparent platform is expected to attract interest from a new set of investors in the market.
Going forward, the AMC plans re-issuance of ETFs with three-year and 10-year target maturities, and 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.
Read also: Edelweiss MF raises ₹12,400 cr via Bharat Bond NFO
Anuradha Thakur, Joint Secretary, Department of Investment and Public Asset Management, said the response that the new fund offer has garnered, gives 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 (Central Public Sector Enterprises) to raise funds through a new class of investors, including retail and foreign portfolio investors," he added.
Rashesh Shah, Chairman and CEO, Edelweiss Group, said the launch of the Debt ETF programme is the culmination of years of effort by the government, regulators, Edelweiss and partners to create a debt product for retail investors that is 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 like no other product has done before, he said.
Debt ETFs will create a new ecosystem of market-makers, bringing together high-quality borrowers and investors to the corporate bond market.
NFO issue oversubscribed 1.8 times
The initial NFO issue size of Rs 7,000 crore was oversubscribed by nearly 1.8 times. The three-year category received applications for Rs 6,982 crore and the 10-year category received ₹5,413 crore. The entrire subscription in both categories will be retained to accommodate the overwhelming demand.
The Bharat Bond NFO saw 55,000 investors participating in it, on the back of strong support from digital partners. It will invest only in AAA rated public sector bonds. The ETF with a three-year maturity will follow the Nifty Bharat Bond Index – April 2023, and that with a 10-year maturity will follow the Nifty Bharat Bond Index – April 2030.
BHARAT Bond ETF combines the 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. Bharath Bond ETF is also the lowest cost mutual fund product in India.