Investments in Debt Securities of InvITs and REITs

Last updated: 24 April 2021

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Insurers are now permitted to invest in the debt securities issued by Infrastructure Investment Trusts (InvITs) and Real Estate Investment Trusts (REITs). New regulations specify that these debt instruments must be rated 'AA' or higher to be considered approved investments. Investments below 'AA' will be classified as 'Other Investments'. There are also limits on the percentage of a single issue an insurer can hold and a cap on cumulative investments in both units and debt instruments of InvITs and REITs relative to the insurer's total fund size. Specific rules apply regarding investments in entities where the sponsor is part of the insurer's promoter group.

Insurance Regulatory and Development Authority Ref. No:IRDAI/FI/CIR/INV/098/04/2021 Date:22-04-2021 CIRCULAR Investments-Master Circular permits insurers to invest in Units of listed Infrastructure Investment Trusts (InvITs) and Real Estate Investment Trusts (REITs). Consequent to Financ

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FAQ :

Debt instruments of InvITs/REITs must be rated not less than 'AA' to be considered part of Approved Investments.

Debt instruments rated or subsequently downgraded below 'AA' will be classified as 'Other Investments'.

No insurer shall invest more than 10% of the outstanding debt instruments (including the current issue) in a single InvIT/REITs issue.

The cumulative investments in both Units and Debt Instruments of InvITs and REITs shall not exceed 3% of the total fund size of the Insurer at any point in time.

No investment shall be made in debt instruments of an InvIT/REIT where the Sponsor is under the Promoter Group of the Insurer.

Investments shall be valued either as per FIMMDA or at applicable market yield rates published by any SEBI-registered Rating Agency.

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Notification No : IRDAI/F&I/CIR/INV/098/04/2021
Published in Miscellaneous
Source : https://www.irdai.gov.in/admincms/cms/whatsNew_Layout.aspx?page=PageNo4454&flag=1

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