SEBI allows FIIs to invest up to $22.5 billion in unlisted infra bonds

Foreign institutional investors (FIIs) can now invest up to 90 per cent of their $25 billion corporate bond investment limit in securities issued by unlisted companies as well, the Securities and Exchange Board of India (SEBI) said in a circular issued today.

With an additional investment limit of $20 billion, FIIs are now allowed to invest up to $22.5 billion, or 90 per cent of the $25 billion investment permitted in corporate bonds, in unlisted instruments as well, SEBI said in a circular.

FIIs can now invest in unlisted bonds issued by companies in the infrastructure sector that are generally organised in the form of special purpose vehicles, SEBI said, adding that the lock-in period for such investments will be subject to inter-FII trading.

SEBI has partially amended the guidelines for investments in corporate bonds and done away with the allocation methodology for investment in corporate debt - long term infra category.

"FIIs and/or their sub-accounts can now avail of these limits without obtaining SEBI approval till the overall FII investments reaches 90 per cent or $22.5 billion," SEBI said.
 
Investments in such bonds should have a minimum lock-in period of three years. However, during the lock-in period, FIIs will be allowed to trade amongst themselves. During the lock-in period, the investments cannot, however, be sold to domestic investors.

No change in identification of companies eligible as "Infrastructure" will also be allowed.