The thriving debt private placement markets has come to
a virtual standstill, ever since the Securities and Exchange
Board of India (SEBI) issued new guidelines in September
2003 on listing of corporate bonds.
market regulator recently mandated initial public offering
(IPO)-like disclosures and listing for private placements.
"The guidelines took the market by surprise and have
since put fresh placements under a limbo, at least for
the time being," says Prithvi Haldea of Prime, India's
premier database on primary capital markets.
is borne out by the measly mobilisation of Rs 1,700 crore
in the October-November period. Prime says there have
been only eight issuers in this two-month period. The
major ones have been Andhra Pradesh Water Resources (Rs
350 crore), Kerala Power Finance (300) and NTC (500).
In addition, IDBI placed Rs 340 crore. The only other
issuers have been GE Capital, IL&FS and Mecon, all
with very small amounts.
may be mentioned here that as per Prime, the first half
of the current fiscal (April-September) had witnessed
a mobilisation of Rs 23,275 crore. In the previous full
years too, there were huge mobilisations: Rs. 48,424 crore
in 2002-03; Rs 45,427 crore in 2001-02; Rs 52,456 crore
the market is awaiting clarifications on several aspects
of the new SEBI guidelines, one thing that is certain:
the days of free-for-all placements without disclosures
and / or listing are over.
to Haldea, the market did require some degree of disclosures
/ regulations to at least prevent dubious issuers from
tapping resources. Huge concerns had been raised, for
example, on the mobilisations of state-level undertakings
(SLUs). In the last three-and-a-half years, SLUs had collectively
mobilised a massive Rs 33,814 crore, mostly on the strength
of questionable state guarantees.
market is hopeful that while addressing such concerns,
the new SEBI guidelines will be streamlined to allow good
issuers to continue to tap this cost-efficient and speedy
source of raising funds.