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Informist, Wednesday, Oct. 7, 2026

--SEBI exempts listed debt cos from appointing invest banker in pvt placement

--SEBI makes credit risk-o-meter disclosure compulsory for debt securities

MUMBAI/NEW DELHI – The Securities and Exchange Board of India Wednesday issued two circulars on key changes in rules for debt securities and debt issuers. The market regulator exempted certain listed debt issuers from having to compulsorily appoint a merchant banker for debt issued through private placement, according to one circular. In the second circular, SEBI made the disclosure of credit risk-o-meter compulsory for offer documents, abridged prospectuses, and private placement memorandums of debt issues, and also for all advertisements of debt issuers or online bond platform providers (OBPPs) and for web and mobile platforms of OBPPs.

Till now, SEBI required issuers of debt securities or non-convertible redeemable preference shares, on a private placement basis at a face value of INR 10,000, to appoint at least one merchant banker. With immediate effect, this changes and such issuers need not appoint a merchant banker if they meet certain conditions. Issuers who need not meet these conditions will continue to have to appoint a merchant banker.

SEBI said in the circular all the conditions specified will have to be met for the exemption. The issuer must be registered or regulated by SEBI, Reserve Bank of India, Insurance Regulatory Development Authority of India, or Pension Fund Regulatory and Development Authority. The debt issuer must also be listed on a stock exchange for at least one year. Further, the issuer must not have defaulted in redemption or repayment of interest obligations in the last three financial years.

Further, the debt security issued will be unsubordinated or senior, and secured by a first or pari passu charge on the issuer's assets. Finally, the debt security must be rated at least AA- or above on the date of private placement.

A dealer at a state-owned bank told Informist the overall market effect of SEBI's rule change would be limited as it would cover only low-risk private placements. The change "eases operational hurdles for small-value private debt placements," and is positive for "more frequent small bond issues by strong issuers," he said. Merchant bankers will lose some fee income on the exempt debt issues, but for the issuers it would lower costs, speed up fund-raising, and encourage more frequent small debt issues, he said.

The other circular issued by SEBI Wednesday on compulsory disclosure of credit risk-o-meter comes into force from around Nov. 21. The credit risk-o-meter has six levels – lowest credit risk, very low credit risk, low credit, moderate credit risk, moderate risk of default, and high to very high risk of default. These levels are based on credit ranging from AAA to D and each level has been assigned a colour code.  End

Reported by Rajesh Gajra and Vaishali Tyagi

Edited by Avishek Dutta

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