INSUBCONTINENT EXCLUSIVE:
NEW DELHI: Over a dozen CPSEs have evinced interest in raising funds through finance ministry's maiden debt exchange-traded fund (ETF) to
meet part of their capital expenditure needs next fiscal, an official said
To start with, finance ministry will provide a platform for only 'AAA' and 'AA' rated Central Public Sector Enterprises (CPSEs) to raise
funds by way of bond issuance using debt ETF route
"As many as 10-15 CPSEs have shown interest to try debt ETF route for fund raising in next fiscal
These would be 'AAA' or AA' rated companies
The bonds would have varying tenure of two, three or five years," an official told
Finance Minister Arun Jaitley had in 2018-19 budget announced coming out with a debt ETF, following success of equity ETFs like CPSE ETF
To give effect to this, Department of Investment and Public Asset Management (DIPAM) is in process of appointing mutual funds or asset
management companies (AMCs) for creating, managing and launching a debt ETF
While inviting bids from AMCs, finance ministry has said public sector banks (PSBs) can also raise funds through debt ETF route
The official, however, said that PSBs would not initially raise funds using this route
The debt ETF would help these state-run companies meet capex and business needs by leveraging their aggregate strength
This will bring enhanced liquidity, investors base and transparency of participating CPSEs
"The CPSEs are also interested to see if fund raising through debt ETF would lower their borrowing cost
The AMC will decide which CPSEs should be clubbed in ETF for lowering cost," official added
In India, corporate bond market constitutes a relatively small size of around 13 per cent in terms of GDP as compared to government bond
market, which is around 30.4 per cent in terms of GDP
The debt market consists of G-Sec market and corporate debt market
The G-Secs accounts for 79 per cent of total amount of outstanding bonds in India
