SEBI Clarifies Asset Cover Norms For Debt
SEBI said on Thursday that regulated finance companies no longer need to show 100% asset cover while selling unsecured debt instruments to raise capital.
The Securities and Exchange Board of India (SEBI) had said in November that issuers of listed debt securities should maintain 100 percent asset cover sufficient to discharge the principal amount at all times.
This was to discourage issuers who were classifying as 'secured' debt instruments where just a fraction of the principal was covered. Secured debt attracts lower coupon rates than unsecured debt.
Secured debt attracts lower coupon rates than unsecured debt.
Bankers say Thursday's note clarifies the earlier rule that in case of debt which is classified as 'unsecured,' no asset cover needs to be maintained.
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Editorial
India A Bright Spot For Otherwise Insolvent CalPERS
I heard that Calfornia Pension is going to default and I started wondering what could be India's contribution to that.
