Market regulator SEBI has proposed to make the investment rules of Category-2 Alternative Investment Fund (AIF) easier to facilitate investment in loans with A credit rating or below rating. This step is being taken in view of the low investment occasions in unacceptable loan securities. The reason for this is the recent Listing Observation and Disclosure (LODR) Regulations of SEBI.
According to LODR amendments, listed units have to be listed in all non-convertible debentures (NCDs) in stock exchanges. This has led to a decrease in the availability of untouchable debt securities for AIF. Category-2 AIFs have to invest at least 50 per cent of their investable funds in primarily unacceptable securities. However, in view of the declining occasions of investment in unacceptable securities, SEBI has proposed a discount in this rule so that Category-2 AIF can invest in listed loans with a credit rating or below rating.