SEBI proposes raising ISIN maturity cap, easing debt listing norms

The Securities and Exchange Board of India (SEBI) has proposed modifications to the regulations governing International Securities Identification Numbers (ISINs) to enhance liquidity and alleviate refinancing pressures. The regulator intends to permit a higher number of ISINs to mature within a financial year and remove the obligation to list all outstanding non-convertible debt securities.

Currently, a maximum of 14 ISINs can mature annually for privately placed debt securities, while this limit would be raised to 17 ISINs under the proposed changes. These adjustments would account for 12 ISINs for conventional debt securities and 5 for structured and market-linked instruments, such as floating-rate bonds and zero-coupon bonds.

The threshold for permitting an additional ISIN would be ₹15,000 crore of plain vanilla debt maturing in a financial year, with an extra ISIN granted for every subsequent ₹3,000 crore. Certain categories, including bonds serviced by the Government of India, extra-budgetary resources (EBR) bonds, and ESG debt securities, would be exempt from this ISIN cap to facilitate the issuance of ESG-linked instruments by public sector entities.

SEBI also suggests easing the requirement for issuers to list all outstanding unlisted non-convertible debt securities at the time of their first listing, effective from January 1, 2024. This decision aims to reduce the financial and operational burdens on new issuers, thereby encouraging debt securities listings. SEBI has drafted a proposal based on feedback from market participants who expressed concerns over the existing ISIN limits, which could potentially trigger a concentration of liabilities and refinancing risks, particularly for non-banking financial companies.