The Debt Market at IFSC: Key Insights & Trends (2024-2025)

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The International Financial Services Centre (IFSC) at GIFT City has emerged as a pivotal platform for Indian financial institutions to tap into international capital markets. The debt market at IFSC showed impressive growth in FY 2024-25, with total issuances reaching USD 6.99 billion across 57 listings, underscoring its growing role as a global capital hub. This article provides an in-depth analysis of the trends, sectoral shifts, and emerging patterns shaping the debt landscape at IFSC.

Market Size and Composition

Cumulative Issuance:
In FY 2024-25, GIFT IFSC facilitated 57 debt issuances, totaling USD 6.99 billion, reflecting its strong presence in the global debt market. Although issuance volumes fluctuated throughout the year, the total issuance volume for the year remained significant, reinforcing IFSC’s role as a key player in global capital flow.

Sectoral Distribution:
The Non-Banking Financial Companies (NBFCs) dominated the market, accounting for 50 issuances totaling USD 5.23 billion. This highlights IFSC’s critical role in facilitating funding for Indian financial institutions, especially NBFCs, that are leveraging international capital markets to fuel their growth.

Issuer Profile:
The top five issuers by volume in FY 2024-25 were:

• Muthoot Finance: USD 650 million (9.3% of total issuance)
• Continuum Trinethra: USD 650 million (9.3% of total issuance)
• State Bank of India: USD 500 million (7.2% of total issuance)
• REC Limited: USD 500 million (7.2% of total issuance)
• Shriram Finance: USD 500 million (7.2% of total issuance)

Together, these five issuers accounted for nearly 40% of the total market volume, highlighting some concentration within the market.

Instrument Analysis

Fixed vs Floating Rate:
The market exhibited a clear preference for fixed-rate bonds, which made up 95% of the total value, with 22 issuances totaling USD 6.66 billion. In contrast, floating-rate bonds represented only 5% of the total value, with 35 issuances totaling USD 329.2 million. This reflects a demand for larger, more stable issuances through fixed-rate bonds, while floating-rate bonds cater to more specialized, smaller funding needs.

Coupon Rates:

• Fixed Rate Bonds: Coupon rates ranged from 3.75% to 9.7%, with an average rate of 6.63%.
• Floating Rate Bonds: Predominantly SOFR-linked, with spreads ranging from SOFR + 0.95% to SOFR + 5.0%, averaging SOFR + 4.43%.
  

Sustainable Finance: ESG-Focused Instruments

Sustainable finance has gained significant traction at IFSC. In FY 2024-25, ESG-focused instruments accounted for 39.4% of the total debt issuance, with green bonds leading the charge.

• Green Bonds: USD 1.455 billion (20.8% of total issuance)
• Social Bonds: USD 850 million (12.1% of total issuance)
• Sustainable Bonds: USD 450 million (6.43% of total issuance)
  

This shift towards sustainable finance underlines the increasing interest in ESG investments and positions IFSC as a hub for sustainable capital flow.

Market Infrastructure & Participants

The trustee services market at IFSC was split between Indian and foreign trustees. Key participants include global entities such as BNY Mellon, Deutsche Bank, and Citicorp International, along with Indian trustees like Catalyst Trusteeship.

• Foreign Trustees: 17 issuances totaling USD 5.415 billion.
• Indian Trustees: 36 issuances totaling USD 1.15 billion.
  

This distribution shows the global and local participation in the IFSC debt market, further enhancing its accessibility to a wide range of institutional investors.

Credit Rating Trends

Out of the 57 issuances, 45.6% were rated, representing 89.5% of the total issuance volume. The ratings were predominantly high yield (BB+ and below), with 20 issuances amounting to USD 4.63 billion, while investment-grade bonds (BBB- and above) accounted for 6 issuances, totaling USD 1.63 billion.

Key Takeaways

• Growth in Debt Issuances: IFSC continues to grow as a critical hub for global debt markets, with USD 6.99 billion raised in FY 2024-25.
• Sectoral Leadership: NBFCs dominated the issuances, reflecting IFSC’s role in connecting Indian financial institutions to international markets.
• Rise of ESG: Sustainable finance gained momentum, with 39.4% of total issuances being ESG-focused instruments.
• Instrument Preferences: Fixed-rate bonds remain dominant, while floating-rate bonds cater to specialized funding needs.
• Credit Rating Mix: A balanced mix of high-yield and investment-grade bonds demonstrates the market’s attractiveness to a wide range of investors.
  

Explore Opportunities at IFSC

The debt market at IFSC is evolving rapidly, offering substantial opportunities for investors and issuers alike. To navigate this dynamic market and explore tailored solutions for your business, connect with Treelife’s expert team.

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Dhairya Chaniyara

Senior Associate | Financial Advisory | dhairya.c@treelife.in

Focuses on direct tax and regulatory services with a specialization in GIFT IFSC. Brings experience from various industries, including manufacturing, FMCG, IT-ITES, and healthcare, to deliver impactful tax solutions.

Priya Kapasi Shah

Associate Partner | Tax & Regulatory | priya.k@treelife.in

Heads Treelife’s Financial Advisory practice, specializing in investment structuring, cross-border transactions, and tax and regulatory advisory. Also leads on AIF setups and advisory services for GIFT IFSC.