Revising its norms for foreign institutional investors (FII) in the infrastructure debt bonds, the capital market regulator Sebi today lowered the minimum bidding and allocation amounts for such investors. As per the revised guidelines, no single FII shall be allocated more than Rs 2,000 crore of the investment limit against the existing Rs 10,000 crore. The market regulator has also reduced the minimum bid size to Rs 50 crore from the existing Rs 250 crore, a SEBI circular said.
Recently, the government allowed FIIs to invest up to USD 5 billion in infrastructure bonds with reduction of lock-in period to one year from earlier three years.
Subsequently, the National Stock Exchange (NSE) will hold the bidding process for the allocation of entire USD 5 billion on October 7, 2011.
These revised norms are likely to attract a higher number of FIIs into the infrastructure bond segment.
Despite the last budget announcement of raising investment limit to USD 25 billion from USD 5 billion earlier, there was cold response from FIIs to such bonds.
By the end of August 31, 2011, investments by FIIs were only USD 109 million, or around Rs 500 crore, against a ceiling of USD 25 billion, or Rs 112,095 crore.