Govt invites bids from advisors for creation of debt ETF for PSUs and banks

The advisor would be appointed for a period of three years that may be extended by two years

The Finance Ministry has invited bids from advisors to help create and launch a debt Exchange Traded Fund (ETF) for PSUs and public sector banks to help them meet their capital expenditure needs.

The Department for Investment and Public Asset Management (DIPAM) on Wednesday came out with a Request for Proposal (RFP) to engage an advisor or consultant for creation and launch of the debt ETF. Bids have to be submitted by May 16.

"This (Debt ETF) will bring enhanced liquidity, enhanced investors base and transparency and smoothening of borrowing plans of the participating CPSEs/PSBs/PSUs. This will benefit both the investors and the issuers," the RFP said.

The advisor would be appointed for a period of three years which may be extended by two years.

Apart from helping in creating the debt ETF, the advisor would also advise the government in launch and management of first issuance or offerings and post issuance provisions.

Any Sebi registered merchant banker or consulting firms having advised or launched an ETF or debt mutual fund or managed issuance of corporate bond of Rs 50 billion or more between April 1, 2015 and March 31, 2018 are eligible to bid for managing the debt ETF.

Finance Minister Arun Jaitley had in the Union Budget 2018-19 said the Bharat-22 ETF was over-subscribed in all segments. DIPAM will come up with more ETF offers, including debt ETF", he had said.

As per official data, 15 central public sector enterprises (CPSEs) have together raised about Rs 3 lakh crore through bonds in the last three years. Of these, 12 companies are AAA' rated, which is the top investment grade.