As per the Economic times, the market regulator Securities and Exchange Board of India (Sebi) is considering to allow 'on tap public issue of bonds' as the platform will give leeway to corporate and allow them to make bond sale via stock exchanges. The sale can be however made after the filing of the prospectus with the regulator.
A report cites one of the person familiar with the development as saying, "After filing the tap bond issue prospectus, a corporate can decide when to enter the market. It can be multiple times during a financial year depending on the fund need and market appetite...as the name suggests, it's turning the tap on or off. Such issuances could be cheaper, and certainly a far quicker way to raise debt capital".
The new tap issue will offer benefit to corporate as against the current shelf-prospectus that enables corporate to issue bonds by making use of the same document many a times. Also, using the new "tap" mode various other formalities such as dealing with merchant banker, registrar, or issuing new ads etc. can be avoided.
Also, the report added that the exchanges will be used to notify the investors of the sale of bond.
Meanwhile, SEBI is looking at ways to build a general framework for 'on tap public issue' as well as ask for comments and feedback from various stakeholders.