GIVING effect to what was announced by the
Union Finance Minister, Mr Pranab Mukherjee, in his Budget Speech to enhance
the limit of FII investment in the corporate bonds, the SEBI today issued
Circular modifying the existing policy.
As
per the Minister's announcement, the FII limit has been hiked from USD
20 bn to USD 25 bn, with a residual maturity
of over five years. With this, the total limit available to the FIIs
for investment in corporate bonds would be USD 40 billion. Since most of
the infrastructure companies are organized in the form of SPVs, FIIs would
also be permitted to invest in unlisted bonds. The investment in the bonds,
both listed and unlisted, should have a minimum lock-in period of three
years. However, the FIIs may be allowed to trade amongst themselves during
the lock-in period.
The
today's circular has modified the policy where the FIIs and the sub accounts
registered with SEBI were permitted to invest in corporate bonds up to USD
20 billion; out of which USD 5 billion was allocated for investment in corporate
bonds with a residual maturity of over five years and issued by companies
in the infrastructure sector as defined in the ECB policy.
To
facilitate trading by FIIs, a special trading window shall be provided by Exchanges
on the same lines as is available for equities in companies where the overall
FII investment reaches the maximum limit.
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