The Securities and Exchange Board of India (Sebi) on Wednesday issued curbs on mutual fund (MF) investments in debt instruments with special features such as additional tier-I (AT1) bonds.
In a circular, the markets regulator said no MF shall, under all its schemes, own more than 10 per cent of AT1 bonds issued by a single issuer.
Further, at the scheme level, the exposure to such instruments shall be less than 10 per cent of the total assets and less than 5 per cent towards a single issuer. The restrictions will apply to all debt instruments that have special features such as subordination-to-equity and convertible-to-equity upon the trigger of a pre-specified event for loss absorption.