Allocation of Government debt & corporate debt investment limits to FIIs
Summary
The circular increases FII investment limits in government and corporate debt by US $5 billion each, restricted to securities with over five years residual maturity. It establishes allocation mechanisms via bidding and first-come-first-served processes with specific caps, minimum bids, and utilization timelines for different debt categories. Custodians are mandated to verify infrastructure sector eligibility, monitor investments, and submit fortnightly compliance reports to SEBI.
Text
Government increased the current limit of Fll investment in Government Securities by US $ 5 billion... Further current limit of Fll investment in corporate bonds is also increased by US $ 5 billion.
It has been decided that above incremental limits, shall be allocated to the market participants through bidding process and first come first served process.
For incremental limit in corporate debt category investment can be made in corporate bonds of companies which would be classified as infrastructure companies in terms of the External Commercial Borrowings (ECB) Policy.
FIIs shall satisfy themselves before investing in instruments under this incremental limits that issuer is in infrastructure sector in terms of the ECB policy.
Custodians will confirm compliance that their clients investments are in bonds issued for infrastructure companies and have residual maturity of more than 5 years in their report to SEBI.
The bidding for these limits shall be done on the BSE from 15:30 hrs to 17:30 hrs, on December 02, 2010...
no single entity shall be allocated more than Rs.2000 cr. of the investment limit. Where a single entity bids on behalf of multiple entities, then such bid would be limited to INR 2000 cr. for every such single entity.
the minimum amount which can be bid for shall be Rs.200 cr. and the minimum tick size shall be Rs.100 cr.
no single entity shall be allocated more than Rs.600 cr. of the investment limit. Where a single entity bids on behalf of multiple entities, then such bid would be limited to INR 600 cr. for every such single entity.
the minimum amount which can be bid for shall be Rs.100 cr. and the minimum tick size shall be Rs.50 cr.
In terms of SEBI circular dated January 31, 2008, the Government debt long term & corporate debt (for both old and incremental) limits shall be allocated in the FCFS basis subject to the following conditions
The debt requests in this regard shall be forwarded to the dedicated email id fii_debtrequests@sebi.gov.in. The window for FCFS process shall open at 08:30 AM IST, December 02, 2010.
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Source: SecMarx — Allocation of Government debt & corporate debt investment limits to FIIs. Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.