Friday, February 15, 2013

REPO IN CORPORATE DEBT SECURITIES


  • The Reserve Bank of India (RBI) has said that listed corporate debt securities of original maturity of more than one year which are rated 'AA' or above by the rating agencies, that are held in the security account of the repo seller, in demat form shall be eligible for undertaking repo.
  • Commercial Papers (CPs), Certificates of Deposit (CDs) and Non-Convertible Debentures (NCDs) of less than one year of original maturity shall also be permitted as eligible security for undertaking repo in corporate debt. Listing requirement indicated above of this paragraph will not be applicable but rating requirement as specified shall apply also for these money market instruments to be eligible as security for undertaking repo in corporate debt.
  • A rating based haircut as under (or higher as may be decided by the participants depending on the term of the repo and the re-margining frequency) shall be applicable on the market value of the corporate debt security prevailing on the date of trade of 1st leg.

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