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Government Working to Set Up Backstop Facility for Corporate Bond Market: Treasury Official

To deepen the corporate bond market, the government is working to set up a “backstop facility” announced in the budget, a senior government official said Friday.

At an event hosted by CII, an additional secretary to the Treasury, Anand Mohan Bajaj said the government had consulted with the RBI to raise the limit on foreign investors’ participation in corporate bonds from 9% to 15%. ..

He said there has been a lot going on in the corporate bond market over the years and a lot needs to be done.

“We are working on a very comprehensive facility, which will certainly instill trust among corporate bond market participants,” he said.

Based on a proposal from Sebi, the bond market buys investment grade bonds in both stress and peacetime with a combined budget of 2021-22.

Bajaj also said the government is also working on an investor charter.

The Charter also focuses on investor rights and responsibilities, and investor dissatisfaction remediation mechanisms.

The Investor Charter not only increases the transparency of the investment process, but also encourages investors in the market to invest with better knowledge.

To protect investors, the Federal Budget for 2021-22, Finance Minister Nirmala Sisaraman, proposed introducing the Investor Charter as the right of all financial investors across all financial products.

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At the event, Chief Economic Advisor Sanjeev Sanyal said the government and RBI are working to include Indian government bonds in the global fixed income index, with announcements in this area expected later this year. rice field.

“Last year, we opened part of the government bond market for foreign players. Some invested in it, but less than 50 percent of the open.

“I think we may enter the global fixed income index. Many microsteps are being carried out, including euroclearing and taxation,” says Sanial.

This move will attract more foreign flows, as many foreign funds are obliged to track global indices. It will also help bring in large-scale passive investment from abroad, resulting in less congestion and more domestic capital will be available to the industry.

Globally, there are several large institutional investors tracking these indexes, such as the Bloomberg Barclays Emerging Markets Bond Index, for sovereign paper positioning.



Government Working to Set Up Backstop Facility for Corporate Bond Market: Treasury Official

Source link Government Working to Set Up Backstop Facility for Corporate Bond Market: Treasury Official

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