SEBI issues draft rules for debt shelf offering

The Securities and Exchange Board of India (SEBI) issued draft rules on Tuesday aimed at allowing listed companies to make frequent debt issuances after filing for a shelf prospectus.

Currently only banks and financial institutions are allowed to raise debt through a shelf offering, a common feature in bond markets used by frequent issuers, or those that want to raise funds in tranches across a period of time.

As per the existing norms, companies, including non-banking financial companies (NBFCs), have to seek fresh approvals every time they need to sell debt.

SEBI draft rules issued on Tuesday would allow companies to issue non-convertible debentures through a shelf offering, subject to certain conditions including a minimal "AA" credit rating and net worth of at least 5 billion rupees.

Infrastructure Debt Funds (IDFs) and companies that are eligible to issue tax-free bonds, will also be allowed to make issuances through a single shelf offering, the draft rules said.

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