Fourteen states plan to raise about ₹486 billion through bonds on February 10, higher than the earlier indication of about ₹420.7 billion. The auction size is the highest since March.
The borrowing plan was announced after market hours on Friday. Market participants adjusted positions based on the higher supply outlook.
RBI releases draft rules on credit derivatives and bond market products
The Reserve Bank of India released a draft regulatory framework covering credit derivatives, credit indices and total return swaps on corporate bonds. The regulator has asked for feedback until February 27.
Also Read | India’s 7% growth outlook supports markets, but economists flag fiscal, trade, and currency risks
The draft proposes eligibility rules for market participants offering credit derivative products. Non-retail users with a minimum turnover of about ₹10 billion will be eligible to offer these products.
The draft also proposes that the settlement basis and market conventions for credit derivative contracts will be specified by the Fixed Income Money Market and Derivatives Association of India.
Market participants may use standard master agreements for credit derivative contracts under the proposed rules.
Exchanges, banks and foreign investors’ participation
Under the proposal, exchanges may offer standard single-name credit derivative contracts on credit indices with guaranteed settlement. Exchanges may also offer futures contracts on credit indices with guaranteed settlement.
Also Read | Bond issuances pick up as states and corporates tap Indian debt market
The draft also proposes allowing foreign portfolio investors (FPIs) to participate in futures on credit indices. Banks may act as market makers and may offer total return swaps.
The framework is currently in draft stage and is open for public feedback until February 27. The move follows earlier policy signals in the Union Budget and prior RBI commentary on developing credit derivative markets.
Catch all the latest updates from the stock market here