SEBI eases valuation norms for perpetual bonds

Simplifying the valuation norms, SEBI has allowed fund houses to carry out valuation of perpetual bonds like AT – 1 bonds based on Yield to Call (YTC) methodology.

This has come after the National Financial Reporting Authority (NFRA) recommended implementation of YTC methodology for AT-1 bonds.

So far, fund houses considered 100 year as maturity period to value this bonds. However, the current valuation methodology will prevail for all other purposes, clarified SEBI.

Perpetual bonds or Additional Tier I Bonds (AT-1 Bonds) are issued without any maturity date but are usually issued with call option. Banks and NBFCs issue such bonds.