What really happens to a bond once its public issue closes and it starts trading on the exchange. Often, for a lower price than everyone just paid.
Imagine you had a strong read on the next few days. A company is about to list its shares, and there is a high probability that on listing day the price opens below what you would pay to apply. Would you still put in your application?
Almost nobody would. Why buy something at 100 when the odds strongly favour it trading nearer 95 the moment it lists? You would probably wait, and buy it cheaper in the open market a few days later.
Yet a version of this happens every single month in the bond market. And people walk into it because of one belief that is quietly, completely wrong.
Ask a typical investor how a bond works, and you will hear some version of this: you apply when the company raises money, you get your bond, and then you hold it until it matures. Buy once, wait for years, collect your interest. A bond, in this telling, is a one time purchase that you cannot buy or sell again.
That is not how it works. The moment a bond lists, it trades on the exchange, exactly like a share. You can buy it, you can sell it, and its price moves every day. There is a first market, where the company sells you the bond at a fixed face value of ₹1,000. And there is a second market, the exchange, where that same bond quietly finds its real price.
Here is the part that matters. In that second market, freshly issued retail bonds very often trade below the ₹1,000 everyone just paid. The same bond that was applied for at ₹1,000 can be sitting on the exchange a few weeks later at ₹990, or ₹985. Which is another way of saying the same bond offered a higher yield on the exchange than it did at issue. The bond public issue, quite often, ends up looking a lot like the trade from our thought experiment.
Two forces push in the same direction. The first is who actually buys these issues. A large share of every retail bond issue is taken up not by retail investors, but by institutions and distributors. They apply, they earn a distribution commission for doing so, and that commission quietly drops their real cost below ₹1,000. So they can sell on the exchange at ₹990 and still come out ahead. Multiply that across an entire issue and you get a steady stream of early sellers, all content to let go just below face value. That selling pressure is what drags the price down.
The second force is that most genuine retail buyers never sell at all. They came for the interest, they intend to hold to maturity, and they are not watching a screen. So the slice of the issue that actually trades is tiny. For many of these bonds, less than 2% of the entire issue changes hands in its first six weeks. The rest simply sits still.
A large, government owned issuer is a completely different animal from a small finance company. When a top rated public sector giant raises money, real institutions trade its bonds actively, and a meaningful slice of the issue can change hands in the first few weeks. When a small lender issues, almost nothing trades. The same event, a bond public issue, produces two completely different afterlives.
All of this thin trading has a flip side, and it works against the buyer. Because so little of an issue changes hands, the size you want to buy starts to matter. A small order can usually be filled at, or near, the price on the screen, there is enough floating around for that. A large order usually cannot. On any given day there simply is not much on offer, so a big position has to be built slowly, over days or weeks, and an impatient large order tends to push the price up against itself. The same thinness that lets a small ticket in quietly is what makes a large ticket slow to accumulate. It is a feature of the market to understand, not a verdict on any single bond.
Alongside is where we track all of it. Every corporate bond issue on the platform, with its first six weeks on the exchange laid out the same way for each: the yield it was issued at, the yield it actually traded at, and how much of the issue really moved. Expand it, and you can go issue by issue, and series by series.
We add every new issue as it lists. Over time this becomes a running record of what the market truly thought of each bond, once the applications closed and the trading began. Call it a demand check, a liquidity map, and a standing reminder that with bonds, as with shares, the price you are offered is not always the price a thing is worth.
We currently track the bonds live on the platform, which today means issues rated A and above. Bonds rated BBB and below are not in yet. We will add them as coverage grows.