Union Budget proposes measures to deepen Corporate Debt markets

Government will work with regulators RBI/SEBI to enable stock exchanges to allow AA rated bonds as collaterals

A number of measures to further deepen bond markets have been proposed by the Union Minister of Finance and Corporate Affairs, Smt. Nirmala Sitharaman, while presenting the Union Budget 2019-20 in Parliament today.

The Finance Minister said, “Corporate Debt markets are crucial for the infrastructure sector.  Though the number and value of bond issuances had gone up, there has been a dip in the last two years.  The market is skewed in favour of private placement”.

The Finance Minister added that given the need to further deepen bond markets, a number of measures are proposed to be taken up, which are as follows;

• To deepen the Corporate tri-party repo market in Corporate Debt securities, Government will work with regulators RBI/SEBI to enable stock exchanges to allow AA rated bonds as collaterals.
• User-friendliness of trading platforms for corporate bonds will be reviewed, including issues arising-out of capping of ISINs.

 

Corporate debt market deepening: allow AA rated bonds as repo collateral and review trading platform constraints to boost liquidity. Government will coordinate with regulators to permit stock exchanges to accept AA rated bonds as collateral for the corporate tri party repo market and will review trading platform user friendliness and ISIN capping to address market frictions that favour private placements.