SEBI : Issuers are permitted to sell debt securities at lower denominations by SEBI

 SEBI: On Thursday, the capital markets watchdog Sebi relaxed its regulations, allowing issuers to sell debt instruments with a face value as low as Rs 10,000. As long as the instruments have a defined maturity and don’t contain structural characteristics, the rule still holds true even if they are zero-coupon.

According to a circular from Sebi, issuers are now permitted to market interest-paying and zero-coupon debt instruments at the lower denomination.

In order to increase public participation, Sebi had already lowered the minimum face value for a number of debt instruments, including bonds and non-convertible redeemable preference shares, to Rs 10,000 in a July 2024 circular. That relaxation, however, was only applicable to instruments that paid dividends or interest on a regular basis.

In order to make certain debt instruments more accessible to the public, Sebi published a circular in July 2024 allowing corporations to issue bonds or non-convertible redeemable preference shares in denominations as low as Rs 10,000 instead of greater quantities. This was limited to instruments that paid dividends or interest on a regular basis, however.

Zero-coupon bonds do not pay interest on a regular basis, according to market analysts. They are instead redeemed at full face value after being sold at a discount, giving investors the opportunity to profit from the price differential over the course of the holding term.

Because of this, Sebi has made certain changes to its regulations that allow issuers to sell zero-coupon debt instruments with a face value of ₹10,000 that have a set term and no complex features.

According to Sebi, this means that “issuers can now issue debt securities at a reduced face value, which may be either interest-bearing or zero-coupon.”