Asset Management - IC-99 Exam Study Notes

Debt instruments with maturity of one year or less is Money Market Instruments, while the debt instruments with maturity of more than one year is called "bond".
A government bond is issued by a government, generally with a promise to pay periodic interest payments and to repay the face value on the maturity date. Another term used for government bond is "sovereign bond".
A corporate bond is a bond issued by a corporation in order to raise financing for a variety of reasons such as financing new project, ongoing operations, business expansion, M & A etc.
Now the insurance regulator has allowed insurers to invest in so-called additional tier 1 (AT1) bonds sold by banks, but the stiff terms set by the regulator mean many banks wont be able to make the grade.
AT1 bonds are perpetual bonds with debt-like and equity-like features issued by banks to augment their tier 1 capital. Insurance firms can invest in AT1 bonds of only those banks with at least an AA rating, according to an Insurance Regulatory and Development Authority of India (IRDA) circular on 30, Nov. Also, insurers wont be able to invest more than 10% in any such issue, nor can they invest in banks which havent declared dividend in the last two years.

Important Points for IC 99 - Asset Management Exam