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Listed cos explore issuing bonds through unlisted arms to avoid listing the debt

LivemintLivemint · 3m
Listed cos explore issuing bonds through unlisted arms to avoid listing the debt

A new regulation in India intended to increase transparency in the corporate bond market is reportedly not achieving its intended goals. The rule mandates that companies with publicly traded bonds wishing to sell non-convertible debt papers must list them on stock exchanges. However, experts suggest that this has led companies to raise debt through unlisted subsidiaries to avoid compliance burdens. The number of non-convertible debenture (NCD) issuances through unlisted subsidiaries is expected to rise, particularly among companies struggling to secure debt in the domestic market. The regulation amendments aimed to enhance price transparency and investor protection but may inadvertently discourage companies from issuing listed bonds and result in delistings.

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