Sebi Proposes Enhanced Corporate Debt Repayment Flexibility

The Securities and Exchange Board of India (Sebi) has introduced proposals designed to offer companies more flexibility in managing their debt repayments. This initiative, detailed in a recent consultation paper, aims to alleviate refinancing pressures and assist issuers, particularly non-banking financial companies (NBFCs), in handling cash flows.

Expanding Debt Maturity Limits

Sebi proposes increasing the annual maturity limit for privately placed debt securities. The current limit of 14 International Securities Identification Numbers (ISINs) would rise to 17 ISINs, allowing companies to spread out their obligations more effectively.

• Issuers could use up to 12 ISINs for plain vanilla debt securities, an increase from the previous nine.
• An additional five ISINs would be allocated for various debt types, including structured debt, market-linked debt, floating-rate bonds, zero-coupon bonds, and debt capital instruments.
• Large issuers with outstanding plain vanilla debt maturing at ₹15,000 crore or more in a financial year would gain an extra ISIN for every subsequent ₹3,000 crore.

Furthermore, the regulator intends to exclude government-serviced bonds and environmental, social, and governance (ESG) debt securities from the ISIN count. This move seeks to promote sustainable finance by reducing the regulatory burden on these specific categories.

Easing Listing Requirements for Older Debt

Sebi also suggested easing existing rules for listing older, unlisted debt securities. Current regulations mandate that companies listing debt must also list all outstanding unlisted non-convertible debt issued after January 1, 2024, which has created significant costs and operational hurdles for new market entrants.

• The proposed change would permit past debt issues to remain unlisted when a company undertakes its first debt listing.
• However, all subsequent debt issues after this initial listing would still be subject to mandatory listing requirements.
• Sebi noted that the requirement to list past issues might have contributed to a decline in listed debt issuance, which fell from 80.81% in September 2023 to 76.55% in June 2026.

These reforms aim to streamline the debt market, offering companies greater operational flexibility and reducing compliance complexities. By addressing both maturity management and listing hurdles, Sebi seeks to foster a more efficient and accessible environment for corporate debt issuance in India.