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Listing of Debt Securities

A non-convertible debt security which creates indebtedness and includes debenture, stock, bonds, and other securities of a body corporate, or any statutory body constitution constituted by virtue of legislation, whether constituting a charge on the assets

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Listing of Debt Securities

A non-convertible debt security which creates indebtedness and includes debenture, stock, bonds, and other securities of a body corporate, or any statutory body constitution constituted by virtue of legislation, whether constituting a charge on the assets of the body corporate or not, but excludes debt securities issued by Governments, municipal corporations or such other bodies as may be specified by the Board is called as debt securities.

Benefits of Listing of debt securities:

➲ Access to large pools of capitals

A public issuance of debt securities gives issuers access to large pools of funds through the various investors who are invested in listed instruments. This is as opposed to private placements that restrict the number and variety of investors that can enter the issuing party.

➲ An effective way of raising capital

Listing debt securities on the stock exchange also offers an effective means of raising capital because of the low cost of raising capital achieved by public listing relative to private placements.

➲ Enhances company profile

Listing creates attention for the listed companies by informing a wider group of potential buyers of their goods. Listing on a capital exchange increases the external and internal visibility of the business. It will reinforce the view that customers, shareholders and other stakeholders have of your business, its goals and how it fulfils its obligations and complies with regulatory requirements.

➲ Increase liquidity

The liquidity provided by debt securities listing allows companies to raise long-term debt securities as individual investors can exit when cash flow is needed. Therefore, listed debt securities are sold at a lower interest rate, as liquidity risk is reduced significantly.

➲ Well regulated security trading

All transactions in debt securities that are classified are performed in a manner consistent with the MSE listing criteria. To prevent unfair trade practices, all transactions in debt securities are monitored by both the MSE and RBM. Therefore this increases small investors 'trust in investing in listed debt securities.


PROCESS OF LISTING OF DEBT SECURITIES

STEP 1: File an application for debt securities listing on one or more stock exchanges and obtain in-principle approval

STEP 2: Obtaining credit rating including the unaccepted ratings obtained from more than one credit rating agency shall be disclosed in the offer document

STEP 3: Enter with a debt securities dematerialization depository in compliance with the Depository Act, 1996 and the regulations made therein

STEP 4: Name one or more merchant bankers and lead merchant bankers and build debenture redemption account as per the Companies Act, 2013

STEP 5: Draft & Final offer document should be displayed on stock exchange websites and is available for download in PDF / HTML formats

STEP 6: Make advertising in one national English daily and one national Hindi daily newspaper with broad circulation on or before the opening date of the issue

STEP 7: In consultation with the lead merchant banker, the issuer shall determine the price and volume of the minimum debt securities subscription and shall reveal the same in the offer document.

STEP 8: Unless the required subscription is not received, all applications submitted in the public issue shall be reimbursed to the applicants forthwith. If the application money is reimbursed beyond 8 days, otherwise these sums are reimbursed along with interest at such a rate that is not less than 15 per cent per year.

What drives listing of debt Securities

a. Listed debt securities pools more investors from market

b. Listed debt securities are more reliable and more attractive

c. Listed debt securities gain faith in investors

d. Listing of debt securities enhances a company’s profile and reputation

e. Listed debt are well regulated and well traded

Debt Listing V/S Equity Listing

Debt Listing

Equity Listing

➲ There is no sharing of ownership

but the company creates more liability

➲ There is a sharing of ownership

through equity listing

➲ Investors called as a debt security holder

➲ Investors here called as a

shareholder or equity shareholder

➲ There is a moderate risk

➲ There is more risk than debt securities

There are no voting rights to

here with debt holders

➲ There are voting rights with security holder

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