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| Some have applauded the move and stated it as a market disciplinary measure. They perceive it as a measure to boost credit offtake from banks resulting in a shift of assets from the investment portfolio to credit portfolio. |
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| Even if a bank prefers to subscribe to bonds, it should happen within the same prudential framework as that of the credit delivery, they said. |
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| They feel that the recent guidelines will ensure monitoring of bond issue proceeds more stringent unlike what used to happen in private placement. |
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| A private placement is the market where any issuer can float a bond with mutual understanding of the issuer and banker. There is no requirement of a prospectus or offer document, rating or listing. In the secondary market, these bonds were traded as negotiated off-market deals. |
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| Bankers feel the shift of investors from bond to credit market will mostly see an influx of second-rung AA or AA- corporates. |
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| This is because, these corporates could manage better rates in the bond market, since as based on PLR, the banks were charging very high rates for giving credit. |
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| At present, with the need for rating and listing, the cost of issuing a bond will substantially go up. Triple-A corporates, they feel, will continue to approach the bond market as pricing is not a problem for them. |
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| This is because, these issues are mostly rated and prices fetched by them do not vary much either in bonds or loans as they usually get sub-PLR loans. |
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| On the other hand, trading banks with not much asset base seems to be a worried lot. According them, it is unfair on the part of the regulator to kill the private placement market which has been approved under the Companies Act. |
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Moreover, the regulators
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