New Delhi, Jan 14 (PTI) To deepen the corporate bondmarket, regulator Sebi plans to come out with a methodologyfor uniform valuation of such products across the financialsector, officials said.
The Securities and Exchange Board of India (Sebi) isclosely working with Reserve Bank of India (RBI) in thisregard.
According to officials, the market regulator will comeout with the framework for 'one single price' of corporatebonds across the financial sector next month after the UnionBudget. It will make uniform rules for calculation ofinterest and redemption payments on bonds.
Currently, different sectors follow different conventionsand divergent practices for holidays or day count, which leadsto varying basis for yield calculation.
Sebi has already set up a separate division to developbond markets and increase retail participation.
Further, the move will provide additional avenues tocorporates for raising funds in a cost effective manner andreducing reliance on bank finance.
Besides, a deep and liquid debt market augments financialsavings and helps match the savers to the borrowers in anefficient manner, they added.
A bond is defined as a debt instrument that provides aperiodic stream of interest payments to investors whilerepaying the principal sum on a specified maturity date.
The bond's price equals the present value of its expectedfuture cash flows.
In its annual report, Sebi chief Ajay Tyagi had said:"Developing a liquid and vibrant corporate bond market furtheris an important agenda for enhancing the role of the Indiansecurities market in channelising long term finance. Sebi willwork with all stakeholders for this."Sebi has been taking a slew of measures to deepen thebond market. This includes allowing foreign portfolioinvestors (FPIs) to invest in unlisted corporate debtsecurities as well as putting in place a new framework forconsolidation in debt securities. PTI SPABM.
This is unedited, unformatted feed from the Press Trust of India wire.