New Delhi: Market regulator Sebi on Wednesday reduced the face value of debt securities to Rs 10,000 from the current Rs 1 lakh to encourage participation of retail investors in the corporate bond market.
Market participants believe that lower ticket sizes of debt securities may encourage more non-institutional investors to participate in the corporate bond market, which in turn may also increase liquidity.
In a circular, Sebi said, "The issuer may issue debt security or non-convertible redeemable preference shares on private placement basis at face value of Rs 10,000".
However, this will be subject to certain conditions such as the issuer must appoint at least one merchant banker, and the non-convertible debentures and non-convertible redeemable preference shares must be plain vanilla, interest or dividend-bearing instruments.
SEBI said that credit enhancement will be allowed in such instruments.
With regard to the General Information Document (GID), which is valid on the 'effective date of the circular', Sebi said the issuer can raise funds through tranche placement memorandum or master information document at a face value of Rs 10,000, provided that the lower A merchant banker is appointed to carry out due diligence in respect of such issues.
“The necessary addendum to the shelf placement memorandum or general information document shall be issued by such issuer,” it says.
In October 2022, the Securities and Exchange Board of India (SEBI) reduced the face value of corporate bonds from Rs 10 lakh to Rs 1 lakh.
Market participants believe that lower ticket sizes of debt securities may encourage more non-institutional investors to participate in the corporate bond market, which in turn may also increase liquidity.
In a circular, Sebi said, "The issuer may issue debt security or non-convertible redeemable preference shares on private placement basis at face value of Rs 10,000".
However, this will be subject to certain conditions such as the issuer must appoint at least one merchant banker, and the non-convertible debentures and non-convertible redeemable preference shares must be plain vanilla, interest or dividend-bearing instruments.
SEBI said that credit enhancement will be allowed in such instruments.
With regard to the General Information Document (GID), which is valid on the 'effective date of the circular', Sebi said the issuer can raise funds through tranche placement memorandum or master information document at a face value of Rs 10,000, provided that the lower A merchant banker is appointed to carry out due diligence in respect of such issues.
“The necessary addendum to the shelf placement memorandum or general information document shall be issued by such issuer,” it says.
In October 2022, the Securities and Exchange Board of India (SEBI) reduced the face value of corporate bonds from Rs 10 lakh to Rs 1 lakh.
