Tightening norms for credit rating agencies (CRAs), Sebi has asked them to proactively monitor the financial health, including share price movement, of companies to provide timely and accurate ratings on their debts.
The decision follows several instances of CRAs not taking cognisance of delays in servicing debt obligations by the issuers they rate, even though the information has already been discounted by the market.
Besides, Securities and Exchange Board of India (Sebi) has increased the disclosure requirements.
“CRAs are required to track the servicing of debt obligations for each instrument rated by them, ISIN wise, and look for potential deterioration in financial which might lead to defaults/delays, particularly before/around the due date(s) for servicing of debt obligations,” Sebi said in a circular.
They would have to monitor the exchange’s website for disclosures made by the issuer.
Sebi asked rating agencies to carry out a review of the ratings upon the “occurrence of or announcement/news of material events” including financial results, any significant decline in share/bond prices of the issuer or group companies if it is not in line with the overall market movement and any attachment or prohibitory orders against the company.
Besides, rating agencies would have to seek a “No Default Statement” from the issuer at the end of each month.
In the rating actions, disclosure report by CRAs would 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, the regulator said.
Published 01 July 2017, 18:21 IST