Sebi allows FPIs to buy corp debt up to Rs 9,500 cr in infra

According to Sebi, sovereign wealth funds, multilateral agencies, endowment funds, insurance funds, pension funds and foreign central banks are long term FPIs.

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Till Sept 22, foreign investments in rupee denominated bonds were `32,381 cr, while the undrawn amount against such bonds was Rs 11,620 cr.

The Securities and Exchange Board of India (Sebi) on Friday allowed sovereign wealth funds and other long term foreign portfolio investors (FPIs) to buy up to Rs 9,500 crore worth corporate debt in infrastructure sector.

This comes after the Reserve Bank of India’s (RBI’s) decision to exclude foreign investment in rupee denominated bonds, popularly known as masala bonds, from the combined corporate debt Limit (CCDL).

“This sub-limit for Long Term FPIs shall be INR 9,500 cr with effect from October 03, 2017 and shall be enhanced to Rs 19,000 cr on January 01, 2018. This sub-limit shall be available for investment on tap,” Sebi said in a circular.

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According to Sebi, sovereign wealth funds, multilateral agencies, endowment funds, insurance funds, pension funds and foreign central banks are long term FPIs.

Sebi said foreign investments in rupee denominated bonds would no longer be reckoned against the combined corporate debt limit from October 3. Further, the CCDL would be renamed as the corporate debt investment limits for FPIs and the upper limit for corporate debt would be stated only in rupee terms.

In its circular, Sebi said that till September 22, foreign investments in rupee denominated bonds were Rs 32,381 crore, while the undrawn amount against such bonds was Rs 11,620 crore. Thus, a total of Rs 44,001 crore has been reckoned against rupee denominated bonds within the combined corporate debt limit of Rs 2,44,323 crore, which would be carved out of erstwhile CCDL and will be added to the new limit of CDIL.