New Delhi: The Centre is set to launch the second tranche of Bharat Bond ETF (Exchange Traded Fund) in July, an official communication said. In a white paper on Bharat Bond, the DIPAM (Department of Investment and Public Asset Management), said, "The competent authority has approved launch of further NFO (New Fund Offering) in the month of July under Bharat Bond ETF Umbrella Programme." The first tranche was launched in December 2019 and had raised nearly Rs 12,400 crore.
The ETF is a basket of debt papers of PSUs (Public Sector Undertakings), CPFIs (Central Public Financial Institutions) or bonds of any other government organisation. All bonds are 'AAA' rated. And the Bharat Bond ETF is an umbrella bond ETF under which multiple issuances can be done.
"The umbrella Bond ETF started with a Target Maturity Bond ETF structure. Going forward, Bharat Bond ETF could adopt different structures. Globally, apart from the Target date Maturity structure, the All-Term/Residual Maturity Structure is the other prevalent ETF structure," the white paper released by DIPAM said.
According to the white paper, the Bharat Bond ETF umbrella programme has five key objectives. It aims at creating a new source of funding for CPSEs, CPSUs, CPFIs and other government organisations to add to the diversification of their investor base at a competitive cost/as a cost-effective mechanism. It also aims to improve liquidity and transparency in the corporate bond market. It will increase retail participation and expanding investor base in the corporate bond market in the country. It intends to help deepen the bond market by enhancing trading activity on stock exchanges with participation of different investor groups. It aims to augment long-term infrastructure financing by the public sector.