Clarification on aspects related to day count convention for debt securities issued under the SEBI (Issue and Listing of Debt Securities) Regulations, 2008
Summary
SEBI clarifies the day count convention and payment mechanics for debt securities issued under the SEBI (Issue and Listing of Debt Securities) Regulations, 2008. The circular mandates that if an interest payment date falls on a holiday, payment is made on the next working day without disturbing the original coupon schedule. It also establishes a uniform Actual/Actual day count method for leap years and restricts payments to days when the Mumbai money market is functioning.
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If the interest payment date falls on a holiday, the payment may be made on the following working day however the dates of the future coupon payments would be as per the schedule originally stipulated at the time of issuing the security.
In case of a leap year, if February 29 falls during the tenor of a security, then the number of days shall be reckoned as 366 days (Actual/Actual day count convention) for a whole one year period, irrespective of whether the interest is payable annually, half yearly, quarterly or monthly etc.
Interest/redemption payments shall be made only on the days when the money market is functioning in Mumbai.
The provisions of this circular shall be applicable for the debt securities issued, in accordance with SEBI (Issue and Listing of Debt Securities) Regulations, 2008, on or after January 01, 2017.
This circular is issued in exercise of powers conferred under Section 11(1) of the Securities and Exchange Board of India Act, 1992 to protect the interests of investors in securities and to promote the development of, and to regulate the securities markets.
Source: SecMarx — Clarification on aspects related to day count convention for debt securities issued under the SEBI (Issue and Listing of Debt Securities) Regulations, 2008. Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.