Sebi has made amendments into the disclosure and investors protection guidelines to provide for the combined offering of non-convertible debentures (NCDs) with warrants through qualified institutions placement (QIP) mechanism.
Sebi said in a statement that the qualified institutional buyers (QIBs) can subscribe to the combined offering of NCDs with warrants or to the individual instruments?either NCDs or warrants where separate books are run for NCDs and warrants.
Sebi said that in consultation with the market participants, it has explored alternate structures which would yield the same benefits as that of domestic convertible bonds (DCBs) to the issuer and enhance the suite of products from the investors? point of view. ?Sebi has put in place a framework whereby a listed company can make a combined offering of non-convertible debentures (NCDs) with warrants to QIBs, under the QIP mechanism.
It may be mentioned here that Union finance minister, in his announcement in the Union Budget for the year 2007-08, has proposed to enhance the tradability of DCBs. This requires a mechanism that will enable investors to separate the embedded equity option from the convertible bond and trade it separately. This mechanism requires basic enablers like existence of long tenor callable credit derivatives market?ability to borrow stock for long tenors to enable short selling, the regulator said.