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Buyer of last resort on cards for corporate bonds


Mutual fund industry officials said the recurring crises in the corporate bond market prompted Sebi to consider the creation of a back-stop facility.

Synopsis

Currently, the discussions are on the possible structures of the proposed entity. Some of the arrangements that are being considered are a company or a Special Purpose Vehicle (SPV) or an Asset Management Company (AMC).

Mumbai: A ‘Buyer of Last Resort’ entity for corporate bonds is in the offing. The government is said to have agreed to the proposal to set up a body that will provide liquidity and confidence to the bond market in the event of a crisis. According to two people familiar with the matter, the Securities and Exchange Board of India’s committee on mutual funds is working on the contours of the concept—the brainchild of the capital markets

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