SEBI for enabling provision for consolidation/re-issue of bonds

Market regulator, Securities and Exchange Board of India (SEBI) Thursday has proposed to have enabling provisions for re-issuance of the existing bonds by an issuer to create a secondary market liquidity.

In a concept paper, the SEBI said it proposes to have enabling provisions for re-issuance of the existing bonds by an issuer in a given time period (say over a quarter).

Any new issue should be preferably a re-issue so that there are large stocks in any given issue, thereby helping to create a secondary market liquidity, it said.

According to SEBI, the public issue of debt securities is covered under SEBI (Issue and Listing of Debt Securities) Regulations, 2008 (SEBI (ILDS) Regulations).

The market regulator has proposed to amend regulation 18 allowing an issuer to carry out consolidation and re-issuance of its debt securities.

The SEBI has proposed that consolidation and re-issuance of debt securities is possible only if the articles of association of the issuer permits the same; the issue is through private placement; the issuer has to obtain credit rating at least from one agency which will have to be revalidated periodically and appropriate disclosures are made in the term sheet.

It has called for public comments on its proposal by Dec 25.