Sebi proposes uniform pricing for non-convertible debt securities

NEW DELHI: To deepen the bond markets, regulator Sebi has proposed a uniform methodology to determine pricing of non-traded and thinly traded non-convertible debt securities.

The requirement of such a framework also assumes significance as large number of such investors belong to categories such as mutual funds, insurance companies and pension funds, which have a mandate of daily net asset value (NAV) with an exit facility at any point of time for their investors.

This requires a reliable and accurate price of the outstanding securities on a daily basis.

As per Sebi, the current practice of pricing of corporate bonds varies for different classes of regulated entities and this impacts trading in the secondary market.

Accordingly, it has been recommended that a uniform pricing methodology be evolved, which provides prices on a daily basis and may be followed by all the regulated entities for valuing their corporate bond portfolio.

"Availability of such a uniform pricing framework, will ultimately lead to improvement in liquidity in the secondary market and thus will help in deepening the bond markets," the Securities and Exchange Board of India (Sebi) said in a 15-page consultation paper issued on Wednesday.

The regulator has sought public comments on the proposal till June 18 and final regulation will be put in place after taking into consideration views of all the stakeholders.

The proposal has been drafted after consulting with representatives of various market participants and industry bodies such as Association of Mutual Funds in India (Amfi) and Fixed Income Money Markets and Derivatives Association(fimmda).

Besides, a stock of the current set of pricing methodologies was taken and as identified in HR Khan committee report, there are primarily two different methodologies, one administered by FIMMDA and the other by credit rating agencies.

Under the proposal, Sebi has focussed on issues like pricing agency, details of the methodology for undertaking pricing activity for bonds, approach of construction of spread matrix, governance framework and dissemination of the pricing related information.

Sebi said a single reference price would not be achieved by prescribing a principle or methodology, however it will generate daily closing prices which would be derived by following a consistent methodology for all the bonds in the market and would thus be more suitable and timely. NEW DELHI: Corporate India announced private equity and venture capital investments worth $2.3 billion in April, taking the year-to-date deal tally to $6.3 billion, says a report.

According to assurance, tax and advisory firm Grant Thornton, there were 79 private equity and venture capital (PE/VC) transactions worth $2.3 billion in April this year, while in the corresponding period last year there were 85 such transactions worth $2.9 billion.

"Absence of large ticket investments resulted in a 22 per cent decline in the value of PE/VC transactions in April 2018 as compared to the $2.9 billion transaction value reported in April 2017," said Pankaj Chopda, Director, Grant Thornton India LLP.

In the January to April period, there were 284 PE/VC transactions worth $6.3 billion, up 21 per cent over last year when the figure stood at $5.2 billion.

Real estate, start up, banking, energy and pharma sectors led the deal activity, capturing 77 per cent of the total deal values. While, the start-up sector dominated the deal volumes with a 58 per cent share.

"PE/VCS continued to invest in start-ups, banking and financial services, real estate, pharma and healthcare and energy and natural resources," Chopda said.

He further said that though opportunities in these sectors will remain of interest, the PE/ VCS are likely to follow a cautious approach given the number of portfolio exits that are outstanding and the upcoming national polls and their impact on policies.

The month was dominated by investments in start-ups, which contributed to 62 per cent of total investment volumes garnering $536 million.

The fintech segment attracted significant investor attention with 12 deals, followed by the travel and logistics space with eight investments. NEW DELHI: Fund inflows into India-focused offshore funds and exchange-traded funds (ETFS) declined sharply to $230 million in Januarymarch this year against net infusion of $1.03 billion in the previous quarter, says a Morningstar report.

Offshore India fund -- not domiciled in India -- receives flow from overseas investors and in turn, invests the money in Indian markets. India-focussed offshore funds as well as ETFS are a subset of the overall foreign portfolio investor (FPI) flows.

During the March quarter, foreign portfolio investors (FPIS) pumped in $2.2 billion in the Indian equity market.