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19 Nov 2024
On Wednesday, the Securities and Exchange Board of India (SEBI) significantly reduced the face value of debt securities from Rs 1 lakh to Rs 10,000 to boost retail investor participation in the corporate bond market.
Market participants believe this lower ticket size will attract more non-institutional investors, potentially enhancing market liquidity.
According to a SEBI circular, debt securities or non-convertible redeemable preference shares can now be issued on a private placement basis at a face value of Rs 10,000.
However, issuers must meet specific conditions, including appointing at least one merchant banker and ensuring that the debentures and preference shares are plain vanilla, interest, or dividend-bearing instruments.
Credit enhancements will also be permitted for these instruments.
SEBI noted that for the General Information Document (GID) valid on the circular's effective date, issuers may raise funds through a tranche placement memorandum or Key Information Document at a Rs 10,000 face value, provided they appoint a merchant banker for due diligence.
Issuers must issue an addendum to the shelf placement memorandum or General Information Document as applicable.
Previously, in October 2022, SEBI had reduced the face value of corporate bonds from Rs 10 lakh to Rs 1 lakh.
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