Capital Markets: Challenges and Developments

SEBI tightens rules for provisional debt rating

Note4Students

From UPSC perspective, the following things are important :

Prelims level : SEBI

Mains level : Paper 3- Regulation of credit rating agencies

New framework for debt instrument

  • The new framework requires that a rating will be considered provisional in cases where certain compliances that are crucial to the assignment of credit rating are yet to be complied with at the time of rating.
  • Under the new framework, all provisional ratings (‘long term’ or ‘short term’) for debt instruments need to be prefixed as ‘provisional’ before the rating symbol.
  • In no case shall a rating, including provisional rating, be assigned by a credit rating agency for an issuer or client evaluating strategic decisions such as funding mix for a project, acquisition, debt restructuring, scenario-analysis in loan refinancing,” SEBI said.
  • On validity period, SEBI said provisional rating will be converted into a final rating within 90 days from the date of issuance of the instrument.
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Hank Fried
Hank Fried
4 months ago

The new framework requires that a rating will be considered provisional in cases where certain compliance that are crucial to the assignment of credit rating are yet to be complied with at the time of rating. https://www.solution2pass.com/TA-002-P-questions.html