SEBI Proposes Allowing Mutual Funds to Buy Below Investment Grade Bonds With Protection From Investment Grade CDS Issuers

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Last Updated on 11 June, 2024

SEBI Mutual Funds

SEBI Consultation Paper, Dated: 07.06.2024

The SEBI has released a Consultation Paper on ‘Flexibility in Participation by Mutual Funds in Credit Default Swaps (CDS)’. The key proposals include (a) allowing mutual funds to purchase below investment grade bonds along with protection (CDS) bought from investment grade issuer, (b) Mandating the rating of CDS programme for buying of CDS by Mutual Fund, (c) allowing Mutual Fund schemes to sell protection i.e. short CDS as part of synthetic debt security, etc.

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