Sebi Proposes Higher Debt Maturity Limit To Ease Repayment Pressure

The Securities and Exchange Board of India (SEBI) has suggested that the number of debt instruments that could mature during a financial year be increased, thereby providing more flexibility to the issuers. The proposal is part of a consultation paper released by the regulator, with comments invited until August 31.

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Higher ISIN Limit Proposed

Sebi has suggested raising the annual limit for International Securities Identification Numbers (ISINs) for privately placed debt securities from 14 to 17. An ISIN is a 12-digit identification code assigned to a particular security.

Under the proposed structure, companies could have up to 12 ISINs for plain vanilla debt securities, compared with nine currently. Five additional ISINs would be available for structured debt, market-linked debt, floating-rate bonds, zero-coupon bonds and debt capital instruments.

The regulator said the changes would help issuers manage cash flows more efficiently and reduce the concentration of repayments in a single period. Market participants had flagged concerns that the existing framework could make liquidity management more difficult and contribute to asset-liability mismatches, particularly for non-banking financial companies.

For companies with larger repayment obligations, Sebi has proposed further flexibility. Once plain vanilla debt maturing during a financial year reaches ₹15,000 crore, an issuer could receive one additional ISIN for every subsequent ₹3,000 crore of such debt.

This would allow larger issuers to distribute their repayment obligations over a wider period instead of having several securities mature around the same time.

Relaxation For Older Unlisted Debt

Sebi has also proposed changes to the treatment of previously issued unlisted debt when a company lists its securities for the first time.

Under the existing framework, companies listing their debt may have to list outstanding unlisted non-convertible debt securities issued after January 1, 2024. The regulator noted that the requirement has resulted in additional costs and operational difficulties for issuers entering the listed debt market.

Under the proposed framework, these older unlisted debt securities could remain unlisted when the issuer lists its debt for the first time. Any debt issued after the initial listing would still be required to be listed.

Listed Debt Share Declines

Sebi said the proportion of listed debt issuance in total debt issuance declined from 80.81% in September 2023 to 76.55% in June 2026. The consultation paper identified the requirement to list previous debt issues as one possible factor behind the decline.

The regulator has also proposed excluding government-serviced bonds, including extra-budgetary resources bonds, from the ISIN calculation. ESG debt securities would similarly be excluded from the limit as part of Sebi’s proposed measures to support sustainable finance.

The proposals remain under consultation, with market participants allowed to submit their comments until August 31. Any changes to the existing framework will depend on Sebi’s review of the feedback received.