Mumbai: Capital markets regulator Sebi has notified a new regulation to allow re-issuance of existing debt securities by a corporate issuer within a specified time period rather than launching a new issue.
The move will help in strengthening the corporate bond market and increasing liquidity.
An issuer can carry out consolidation and re-issuance of its debt securities in case the issue is made through private placement, obtained fresh credit rating for each re-issuance from at least one registered rating agency and appropriate disclosures are made.
It will enable illiquid and infrequently traded corporate bonds to be re-issued thereby leading to creation of a larger floating stock that can increase liquidity in the market.
An issuer making public issue of debt securities may recall such securities prior to maturity date at its option (call) or provide such right of redemption prior to maturity date (put) to investors.
"Such right to recall or redeem debt securities prior to maturity date is exercised in accordance with the terms of issue and detailed disclosure in this regard is made in the offer document including date from which such right is exercisable, period of exercise (which shall not be less than three working days), redemption amount," Sebi said.
The issuer would have to pay the redemption proceeds to investors along with interest due to them within 15 days from the last day within which such right can be exercised. In case of dealy, the issuer would have to pay 15 percent annually.
