Market regulator Sebi plans to ease AIF debt investment regulations

Due to shrinking universe of unlisted debt, Sebi has proposed to allow Category II AIFs to invest in lower-rated paper

The Securities and Exchange Board of India (Sebi) has floated a proposal to relax investment norms for Category II Alternative Investment Funds (AIFs) to allow them to invest in listed debt securities with a credit rating of 'A' or below.

 

The move comes in response to the shrinking universe of investment opportunities in unlisted debt securities due to recent amendments to the Sebi Listing Obligations and Disclosure Requirements (LODR) Regulations.

 

According to the LODR amendments, listed entities are required to list all non-convertible debt (NCD) securities on the stock exchange. This has inadvertently resulted in a reduction in the availability