FII Investment in corporate bonds infra long term category
Summary
The Securities and Exchange Board of India increased the investment limit for Foreign Institutional Investors in long-term infrastructure corporate bonds to USD 25 billion. FIIs are now permitted to invest in unlisted bonds issued by infrastructure special purpose vehicles, subject to a three-year lock-in period. The circular abolishes the previous allocation methodology, allowing direct access to limits until 90% utilization, while maintaining existing eligibility criteria for infrastructure companies.
Text
The existing limit of USD 5 billion... has been increased by an additional limit of USD 20 billion taking the total limit to USD 25 billion. These investments are now permissible in unlisted instruments.
FIIs shall now be eligible to invest in unlisted bonds issued by companies in the infrastructure sector that are generally organised in the form of special purpose vehicles.
Investments in such bonds shall have a minimum lock-in period of three years. However, during the lock-in period, FIIs will be allowed to trade amongst themselves. During the lock-in period, the investments cannot however, be sold to domestic investors.
Identification of corporate bonds issued by companies in the infrastructure sector shall be in terms of SEBI circular IMD/FII&C/18/2010 dated November 26, 2010.
In partial amendment to the aforesaid circular IMD/FII&C/18/2010, it is decided to do away with the allocation methodology for investment in Corporate Debt –Long term Infra category.
FII/sub-accounts can now avail of these limits without obtaining SEBI approval till the overall FII investments reaches 90% (ninety percent) i.e. USD 22.5 billion. After which the process mentioned in circular dated November 26, 2010 shall be initiated for allocation of remaining limits.
To facilitate to the FIIs during the lock-in period as mentioned at para 3 above, a special trading window for FIIs shall be provided by Exchanges on the same lines as is available for equities in companies where the overall FII investment has touched the maximum limit.
Source: SecMarx — FII Investment in corporate bonds infra long term category. Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.