Business & Economy Current Affairs 2017

FTSE SBI Bond Index: India’s first bond index series launched by SBI

State Bank of India (SBI) along with FTSE Russell, global index and data provider launched FTSE SBI Bond Index series at London Stock Exchange (LSE). It is India’s first bond index series for overseas investors.

It launch follows November 2015 visit of Prime Minister Narendra Modi in UK when letter of intent was signed between SBI and FTSE to jointly develop new index tracking Indian fixed income securities.

FTSE SBI Bond Index Series

FTSE SBI Bond Index is positioned as first-of-its-kind transparent and reliable benchmark for investors in international markets to analyse India’s government bond market. It will significantly contribute to development and broadening of Indian bond market. It demonstrates SBI’s commitment to play befitting leadership role in development of India’s bond market.

Background

Indian government bond market is worth around $1.7 trillion. Prior to launch of FTSE SBI Bond Index, the bond market was not having any reliable international indices on which international investors can invest in the country. Investors are eager to invest in India, but lacked enough depth in terms of the various types of bond products.

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SEBI allows REITs, InvITs to raise funds via debt securities

Capital markets regulator SEBI (Securities and Exchange Board of India) amended guidelines of Real Estate Investment Trusts (Reits) and Infrastructure Investments Trusts (InvITs) in order to broaden scope of fund raising by such instruments.

Amended Guidelines

It allows REITs and InvITs to raise capital by issuing debt securities. REITs now require to have 50% stake in holding company marginally less from earlier limit of 51%. Like InvITs, REITs are now allowed to invest in single assets and can also lend to an underlying holding company. ​REITs have been allowed to lend to an underlying holding company or a special purpose vehicle (SPV).

Real Estate Investment Trusts (Reits)

Reits are investment vehicles that can be used by real estate players to attract private investment, while investors (both retail and institutional) can gain dividends generated from income-producing real estate assets like office buildings, shopping malls, etc. They are similar to mutual funds which provide opportunity to invest in equity stocks, whereas REITs allow one to invest in income-generating real estate assets.

In REITs, most of the earnings via sale / rent of such investments are distributed to its shareholders. Its purpose is to improve the liquidity position of Real Estate developers and give a secure avenue to investors to invest in long term. REITs are only for completed projects not the under-construction projects. They are primarily for commercial projects and mainly serve as an alternative investment.

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