Sebi to work for liquid, vibrant corporate bond market

New Delhi: Capital market regulator Sebi will work on developing a liquid and vibrant corporate bond segment to make the Indian securities market a "good source" of debt financing, its chairman Ajay Tyagi said.

"Developing a liquid and vibrant corporate bond market further is an important agenda for enhancing the role of the Indian securities market in channelising long term finance. Sebi will work with all stakeholders for this," Tyagi said in annual report's message.

"The securities market can be a good source of debt financing only in the presence of a liquid and vibrant corporate bond market," he said further.

Going forward, development of the corporate bond market through trading of securitised receipts and increased participation of domestic institutional investors will continue to engage the attention of Sebi.

In June, the Securities and Exchange Board of India (Sebi) had put in place a new framework for consolidation in debt securities as part of its efforts to deepen the corporate bond market.

In order to increase liquidity as well as ensure that an issuer's ability to raise funds through debt securities is not curtailed, Sebi focused on minimising the number of ISINs (International Securities Identification Numbers).

Under the new framework, an issuer will be permitted a maximum of 17 ISINs maturing per financial year.

A maximum of 12 ISINs maturing per financial year will be allowed only for plain vanilla debt securities. Within the limit of 12, an entity can issue both secured and unsecured non-convertible debentures while no separate category of ISINs will be provided to them.

Furthermore, an entity can issue up to five ISINs every fiscal "for structured debt instruments of a particular category".

ISINs code, which has 12 characters, is used for uniquely identifying securities like stocks, bonds warrants and commercial papers.

According to Sebi, trading of corporate bonds in the secondary market has increased in recent years and stood at Rs 14.7 lakh crore in the last financial year. The amount was just Rs 1.48 lakh crore in 2008-09.

However, liquidity in the secondary market for these bonds has not picked up much, especially in comparison with primary market issuances.