Inviting all stakeholders to come forward with suggestions to further boost the bond market ecosystem, Sebi chairman Ajay Tyagi has said there is an immense opportunity for development of this market in the backdrop of the NPA crisis in banking sector.
He also said rating agencies have an important role as gatekeepers in maintaining trust of investors in bond market and Sebi would consider further necessary changes in norms for them in consultation with stakeholders, after a number of steps taken to rationalise their governing structure and for close monitoring of ratings.
Speaking at a seminar on developing the debt market on Wednesday, Tyagi also said the corporate bond market could get a boost if sectoral regulators of pension funds, provident funds and insurance firms could allow their regulated entities higher exposure in the segment.
“Institutional investors such as pension funds, provident funds and insurance companies can generate far higher demand for longer dated corporate issuances.
“They are, however, guided by investment norms prescribed by respective sectoral regulators,” he said, adding that relaxation of norms to allow higher allocation to the corporate bond market would help earn incremental returns and generate demand for corporate bonds.
More importantly, he said, since these institutions are long-term investors and typically hold investments till maturity, they can act as ideal counter parties to infrastructure firms that require funding through longer-dated instruments.
“We are working on operationalising the 2018-19 budget announcement which mandates large corporates to raise 25 per cent of their financing needs from the bond market. Sebi would be shortly issuing the operational framework (for the same),” Tyagi said.
He said Sebi has taken slew of measures to develop a vibrant corporate bond including issuing a framework for electronic book building mechanism to provide enhanced transparency in issuance of debt securities on private placement basis.