Nod to repo in corporate debt of less-than-a-year maturity

The Reserve Bank of India (RBI) has permitted repo (repurchase agreements) in corporate debt on commercial papers (CPs), certificates of deposit (CDs) and non-convertible debentures (NCDs) of less than a year of original maturity, according to a notification on Monday.

has also decided to allow (CDS) on unlisted but rated corporate bonds even for issues other than infrastructure companies. “CDS shall be permitted on securities with original maturity up to one year like CPs, CDs and NCDs with original maturity less than one year as reference/deliverable obligations,” the notification said.

The banking regulator also said the users should be allowed to unwind their CDS bought position with original protection seller at mutually agreeable or Fixed Income Money Market and Derivatives Association of India (FIMMDA) price. “If no agreement is reached, then unwinding has to be done with the original protection seller at FIMMDA price,” RBI said.

The minimum haircut applicable on the market value of the corporate debt securities prevailing on the date of trade of the first leg has also been revised. For ‘AAA’, which signifies the highest security, it has been revised from 10 per cent to 7.5 per cent. In the case of ‘AA+’, the revision is from 12 per cent to 8.5 per cent and for ‘AA’, it is from 15 per cent to 10 per cent.

image
Business Standard
177 22
Business Standard

Nod to repo in corporate debt of less-than-a-year maturity

BS Reporter  |  Mumbai 



The Reserve Bank of India (RBI) has permitted repo (repurchase agreements) in corporate debt on commercial papers (CPs), certificates of deposit (CDs) and non-convertible debentures (NCDs) of less than a year of original maturity, according to a notification on Monday.

has also decided to allow (CDS) on unlisted but rated corporate bonds even for issues other than infrastructure companies. “CDS shall be permitted on securities with original maturity up to one year like CPs, CDs and NCDs with original maturity less than one year as reference/deliverable obligations,” the notification said.

The banking regulator also said the users should be allowed to unwind their CDS bought position with original protection seller at mutually agreeable or Fixed Income Money Market and Derivatives Association of India (FIMMDA) price. “If no agreement is reached, then unwinding has to be done with the original protection seller at FIMMDA price,” RBI said.

The minimum haircut applicable on the market value of the corporate debt securities prevailing on the date of trade of the first leg has also been revised. For ‘AAA’, which signifies the highest security, it has been revised from 10 per cent to 7.5 per cent. In the case of ‘AA+’, the revision is from 12 per cent to 8.5 per cent and for ‘AA’, it is from 15 per cent to 10 per cent.

RECOMMENDED FOR YOU

Nod to repo in corporate debt of less-than-a-year maturity

The Reserve Bank of India (RBI) has permitted repo (repurchase agreements) in corporate debt on commercial papers (CPs), certificates of deposit (CDs) and non-convertible debentures (NCDs) of less than a year of original maturity, according to a notification on Monday.

The Reserve Bank of India (RBI) has permitted repo (repurchase agreements) in corporate debt on commercial papers (CPs), certificates of deposit (CDs) and non-convertible debentures (NCDs) of less than a year of original maturity, according to a notification on Monday.

has also decided to allow (CDS) on unlisted but rated corporate bonds even for issues other than infrastructure companies. “CDS shall be permitted on securities with original maturity up to one year like CPs, CDs and NCDs with original maturity less than one year as reference/deliverable obligations,” the notification said.

The banking regulator also said the users should be allowed to unwind their CDS bought position with original protection seller at mutually agreeable or Fixed Income Money Market and Derivatives Association of India (FIMMDA) price. “If no agreement is reached, then unwinding has to be done with the original protection seller at FIMMDA price,” RBI said.

The minimum haircut applicable on the market value of the corporate debt securities prevailing on the date of trade of the first leg has also been revised. For ‘AAA’, which signifies the highest security, it has been revised from 10 per cent to 7.5 per cent. In the case of ‘AA+’, the revision is from 12 per cent to 8.5 per cent and for ‘AA’, it is from 15 per cent to 10 per cent.

image
Business Standard
177 22

More News

  • RBI permits banks to hire ex-officials for internal audit RBI permits banks to hire ex-officials for internal audit
  • Bandhan's first year
Widgets Magazine
Widgets Magazine
Advertisement

Upgrade To Premium Services

Welcome User

Business Standard is happy to inform you of the launch of "Business Standard Premium Services"

As a premium subscriber you get an across device unfettered access to a range of services which include:

  • Access Exclusive content - articles, features & opinion pieces
  • Weekly Industry/Genre specific newsletters - Choose multiple industries/genres
  • Access to 17 plus years of content archives
  • Set Stock price alerts for your portfolio and watch list and get them delivered to your e-mail box
  • End of day news alerts on 5 companies (via email)
  • NEW: Get seamless access to WSJ.com at a great price. No additional sign-up required.
 

Premium Services

In Partnership with

 

Dear Guest,

 

Welcome to the premium services of Business Standard brought to you courtesy FIS.
Kindly visit the Manage my subscription page to discover the benefits of this programme.

Enjoy Reading!
Team Business Standard