Description

Modification of step-up/step-down coupon rate structure and mandatory redemption event criteria for Piramal Finance Limited debentures.

Summary

Piramal Finance Limited has modified the terms of its debt securities, updating the step-up/step-down coupon rate mechanism and mandatory redemption event criteria. The changes introduce different coupon rate adjustments based on rating levels and modify the rating threshold that triggers mandatory redemption.

Key Points

  • Modified step-up coupon mechanism: 0.25% increase per rating notch downgrade from AA to A+, then 1.00% increase for downgrade from A+ to A
  • Updated step-down mechanism: 1.00% decrease for upgrade from A to A+, then 0.25% decrease per notch from A+ to AA
  • Mandatory redemption trigger changed from rating downgrade to A- or below to A or below
  • Rating criteria now applies to both debentures and company ratings from any SEBI accredited agency
  • Most conservative rating available will be considered for all calculations

Regulatory Changes

The circular updates two key clauses in the debt securities terms:

  1. Step Up/Step Down Coupon Rate mechanism with more granular rating-based adjustments
  2. Mandatory Redemption Event criteria with tightened rating thresholds

Compliance Requirements

  • Debenture holders should be aware of the modified coupon rate adjustment mechanism
  • Rating agencies must continue monitoring and rating the securities according to SEBI guidelines
  • The company must comply with mandatory redemption if rating falls to A or below (previously A- or below)

Important Dates

  • Effective Date: August 8, 2025 (circular publication date)
  • Rating changes will trigger coupon adjustments from the date of rating action

Impact Assessment

The modifications provide more structured coupon rate adjustments based on credit rating changes, potentially offering better protection to investors during rating downgrades. The tightened mandatory redemption trigger (A instead of A-) provides earlier investor protection but may increase refinancing pressure on the issuer at higher rating levels.

Impact Justification

Changes to debt instrument terms affect investor returns and redemption triggers