New Student Offer Use Code - HELLO

Join Here

SEBI Directs MFs to Value AT-1 Bonds Based on Yield-to-Call

Published on August 07, 2024
Current Context: The Securities and Exchange Board of India (SEBI) has directed mutual funds to value Additional Tier-1 (AT-1) bonds based on the “yield-to-call” methodology.
SEBI Directs MFs to Value AT-1 Bonds Based on Yield-to-Call
  • This decision aligns with the recommendation from the National Financial Reporting Authority (NFRA) to ensure consistency with market practices.
  • AT-1 bonds are perpetual bonds issued by banks to raise regulatory capital.
  • They do not have a maturity date but include a call option, allowing the issuer to redeem them after a specific period.
  • This change is expected to make it easier for lenders to raise funds through these instruments and could increase demand for AT-1 bonds from mutual funds.

Question:

1 According to SEBI’s latest guidelines, What is the new valuation methodology mandated by SEBI for Additional Tier-1 (AT-1) bonds?

  • A) Yield-to-Maturity (YTM)
  • B) Yield-to-Call (YTC)
  • C) Current Yield
  • D) Price-to-Earnings Ratio
ebook store

About Me

Ramandeep Singh

Ramandeep Singh - Educator

I'm Ramandeep Singh, your guide to banking and insurance exams. With 14 years of experience and over 5000 successful selections, I understand the path to success firsthand, having transitioned from Dena Bank and SBI. I'm passionate about helping you achieve your banking and insurance dreams.

  • Follow me:
Close Menu
Close Menu