9911796707
TMI BlogMonitoring and Review of Ratings by Credit Rating Agencies (CRAs)X X X X Extracts X X X X X X X X Extracts X X X X ..... yield timely and accurate ratings. It is reiterated that CRAs are required to ensure prompt and accurate rating action. Accordingly, the following clarifications in respect of monitoring mechanism, disclosure norms and timelines are being brought to the attention of CRAs for compliance: 1. Surveillance Mechanism for identifying potential defaults: As per Regulation 15 of SEBI (Credit Rating Agencies) Regulations, 1999, CRAs are required to continuously monitor the rating of securities and disseminate information regarding newly assigned ratings, and changes in earlier rating promptly through press releases on websites of CRAs as well as all the stock exchanges where the said securities are listed. In order to enable CRAs to develop effic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at point 3B (III) below and disseminate the same on its website and to all stock exchanges where the security is listed. IV. The CRA shall also make a reference to SEBI regarding such suppression of information by the issuer/ non-cooperation of Issuer with CRA. Failure to make such reference shall be considered as aiding and abetting the Issuer in suppression of material information by the CRA which would be in contravention of Clause 12 of Code of Conduct of CRAs and may result in violation of the provisions of section 12A of the Securities and Exchange Board of India Act, 1992 and SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 2003 by the CRA. B. Material Events requiring a revi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A shall seek a 'No Default Statement (NDS)' from the Issuer at the end of each month, which shall be provided to the CRA by the Issuer on the first working day of the next month. II. The NDS shall require the Issuer to explicitly confirm to the CRA that it has not delayed on any payment of interest/ principal in the previous month. III. In case there have been delays, the Issuers shall state the same in this statement and the CRA shall promptly conduct a rating review and disseminate the rating action through Press Release within 2 days of receipt of such statement. IV. A standardized format of the NDS is provided at Annexure A. 2. Timelines of review and Press Releases: A. In order to enable CRAs to disseminate information on ratin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... R/ P/ 2016/ 119 dated November 01, 2016 on standardization of press release, it is reiterated that press releases for rating actions by CRAs shall include key financial indicators and ratios for the Issuer for the last and current financial year, in tabular form, as well as any other significant information relevant to the Issuer and its Sector. II. With regard to Structured Finance products, the CRA shall include all the assumptions/ covenants made while carrying out the review of such products in the Press Release. B. Disclosures in case of considerable delay in providing information by the Issuer: I. As per Regulation 18(2) of SEBI (CRA) Regulations, 1999, the CRA, while covering the analysis of the various factors justifying the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t in violation of the provisions of section 12A of the Securities and Exchange Board of India Act, 1992 and SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 2003 by the CRA. B. Strengthening of Rating Agreement: I. It is clarified that in order to ensure cooperation from the Issuer, as required under Regulation 14(d) of SEBI (CRA) Regulations, 1999, the following enabling clauses maybe built in the Rating Agreement: a. "The client (issuer/ borrower) agrees to provide the information sought by the CRA immediately, but not later than 7 days from the date of seeking such information by the CRA. In cases of delay/ default in servicing debt obligations, the information shall be provid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erified during the half-yearly Internal Audit.
6. This circular is issued in exercise of the powers conferred by Section 11 (1) of Securities and Exchange Board of India Act, 1992 read with the provisions of Regulation 20of SEBI (Credit Rating Agencies) Regulations, 1999 to protect the interest of investors in securities and to promote the development of, and to regulate, the securities market.
Yours faithfully,
Surabhi Gupta
Deputy General Manager
Tel. No: 022-26449315
Email id: [email protected]
Annexure-A: Standard Template for No Default Statement (Minimum Information be sought)
To
X X X X Extracts X X X X X X X X Extracts X X X X
|
