New Delhi, Jan. 17: The Securities and Exchange Board of India (Sebi) will issue separate guidelines on corporate bond listing.
“All corporate bonds meant for trading must be listed. We will come up with separate guidelines for their listing with a view to ensuring the safety of investors,” Sebi chairman G. N. Bajpai said after the market-awareness campaign was launched here by the Prime Minister.
Corporate Bonds are debt instruments issued by private and state-run firms. Interest rates on these instruments are mainly determined by the credit rating. Currently, AAA-rated (Triple A) paper offers a return of 6.2 per cent, while AA debt carries a coupon of 7 per cent.
The daily traded volumes in the corporate bond market is around Rs 100-150 crore as compared with the Rs 4,000-6,000 crore in the government securities (G-secs) market. Banks, mutual funds and financial institutions are among the major investors in these bonds.
Bajpai also said the security-market awareness campaign would have an indirect impact on bourses. “The market is driven by sentiment……knowledge will make it stable and there will be much less volatility.”
Asked when the proposals of the Joint Parliamentary Committee probing the stock market scam and related matters will be implemented, the Sebi chief said: “We have analysed and set a one-year time frame for implementation of their recommendations.” “We are going to enhance the disclosure standards of private placement of debt. The R. H. Patil committee set up by Sebi has given its report.”
Bajpai said the norms for listed debt instruments were in place but there was a need to have greater disclosure in the case of privately placed instruments. The move comes after a spate of private placement of debt issues by companies without adequate disclosures.