According to the Sebi
rules, any company proposing to make a public issue of debt securities is required to provide audited financials which are not older than six months from the date of the offer document.
However, listed entities (that have listed equity shares or debentures and in compliance with the listing agreement) can disclose unaudited financials, instead of audited financials, for the interim period.
is learnt to have asked many unlisted NCDs to get listed. However, companies would only come on board if there is a waiver of the existing disclosure requirements, says an expert.
In 2019, a large number of NCD issuances took place mostly because banks and mutual funds had dried up after a series of liquidity crises. Many NBFCs opted for public issuance of bonds to meet the regulatory requirement that large firms need to raise 25 per cent through bonds.
“Listing compliance for only NCD-listed companies is pretty light, but unlisted NCDs are beyond the purview of Sebi. Since mutual funds are regulated by Sebi and so are listed NCDs, it is a good proposal to get unlisted NCDs listed to ensure transparency and better price discovery, and more importantly liquidity, as mutual funds should be able to exit in times of need. Relaxed listing guidelines for only NCDs are already in place. Gradually, the reserve bank should also mandate all unlisted NCDs held by banks to get listed," said Prithvi Haldea, founder, PRIME Database.
According to PRIME Database, firms raised approximately Rs 64,405 crore in 2019-20 through unlisted corporate bond and non-convertible debentures.
About Rs 5.93 trillion worth of public issuances of NCDs were made over the period.
NCDs are loan-linked bonds (which cannot be converted into stocks) and usually offer higher interest rates than convertible debentures, bank fixed deposits, and corporate deposits.