OBPPs pitch investor protection fund for retail bond investors

Canara Bank is set to raise up to Rs 4,500 crore through the issuance of Basel III-compliant AT-1 bonds next week, with an expected 7.85%-7.90% coupon. The bonds are part of the bank's Rs 8,500 crore fiscal capital plan, which also includes the issuance of Tier 2 bonds later. The universal premium for these bonds has been linked to the issuer's credit risk, with the goal of providing a form of insurance for retail investors. This move is seen as a step to enhance investor trust in corporate bonds. Online bond platforms are also advocating for the creation of a new investor protection fund, which would serve as a safety net for investors in case of issuer defaults. The initiative has been discussed in conversations between providers of online bond platforms and regulators, with the possibility of a universal premium being explored. The move is part of a broader effort to improve investor protection and increase transparency in the corporate bond market. The Indian government has set a target of raising Rs 6 lakh crore from the issuance of fiscal bonds in the current fiscal year, with the corporate bond market expected to play a significant role in achieving this target.