Commercial Paper can be issued by a company whose (i) tangible net worth (paid-up capital plus free reserves) is not less than Rs 4 crores (ii) fund based working capital limits are not less than Rs. 4 crores (iii) Specified Credit Rating of P2 is obtained from CRISIL, A2 from ICRA and PR2 from CARE (iv) Borrowal health is classified under health code No. 1 and (v) Current ratio is 1.33: 1.
Mode of Issue and Discount Rate: should be in the form of usance promissory note negotiable by endorsement and delivery. It can be issued at such discount to face value as may be decided by the issuing company.
Procedure for Issue: issued only through the bankers who have sanctioned working capital limits to the company should submit the proposal in the form prescribed by the RBI to the bank which provides working capital along with the credit rating of the company.
privately place the issue within two weeks by the company or through the good offices of a merchant banker.
A transaction in which a corporation exchanges existing bonds (debt) for newly issued stock (equity). For example, XYZ company can in essence cancel a portion of their debt and transfer the equivalent balance to equity. A debt-equity swap can help a company that is in financial trouble by canceling some of its outstanding debt.