Sunday , October 17 2021

Decrease in the IL & FS crisis: Sebi tightens the disclosure rules for credit rating agencies



In order to provide a way to analyze the work of the investor credit rating agency, Sabie also asked to publish data on the transitional estimates of the historical average rating for various rating categories. Photo: Abhijit Bhatlekar / Mint

In order to provide a way to analyze the work of the investor credit rating agency, Sabie also asked to publish data on the transitional estimates of the historical average rating for various rating categories. Photo: Abhijit Bhatlekar / Mint

Mumbai: India's market regulator has stepped up its transparency rates for credit rating agencies after the failure to timely notify investors of infrastructure leasing and deterioration in the credit profile of Financial Services Ltd (IL & FS). Rating agencies should now disclose the liquidity position of the valued company, said the Indian Securities and Exchange Council (Sebi) at a roundtable on Tuesday.

The liquidity position of the Company includes adjustments such as liquid investments or cash balances, access to unused credit lines, liquidity coverage and cash flow balances for servicing outstanding debt.

Credit rating agencies should also be published with the name of the issuing organization if the company expects additional funds to be shared. Credit rating agencies also analyze liquidity deterioration and also check asset-liability mismatch.

The survey on Tuesday follows a sharp decline in the rating of bonds raised by IL & FS and their affiliated companies following a default in September. Credit rating agencies (CRAs) lowered bonds from high investment levels (in some cases, AA +) to default or outdated.

Also READ | What can you do about the credit rating?

"Change of sharp rating makes an unexpected and unexpected element. PSEs should try to keep them small. In this regard, the opening of a sharp rating action in one place and the consolidated exchange of the web site are a great step. This will allow interested parties, including investors and regulators, to effectively and transparently compare and analyze data on each CRA, "said Svetlana Vemuri, Senior Director of Crisil Ratings.

This was the fourth time that Sabie changed the standards for credit rating agencies. In November 2016, the Sami Crisil and Credit Analysis and Research Ltd (CARE) have failed to comply with the relevant process, and the JP Morgan Loan Facility and Amtek Auto Ltd. issued rating regulations for rating agencies not fulfilling their rating ratings. The rating was subsequently resolved by the agency's engagement mechanism.

After his boardroom meeting in December 2017, she re-instated the process of reassessing norms of ownership and removing ratings.

On June 21, after the Board meeting, the Debi has changed the ownership and governance structure of its rating agencies. "Although this discovery is good and good, it does not solve the problem of" rating agencies ". There is a lack of accountability. If the rating agency's behavior violates the Shabby's norms, they will not be allowed to solve it through a mechanism of offense, "Zh.N. Gupta, formerly executive director of Baby. It is also the founder of the Stakeholder Engagement Services.

In order to ensure that investors have a different way of analyzing the rating agency, Sabie has also requested information on the transitional estimates of the historical average rating for various rating categories. Comparison of different ratings in accordance with the Vemuri crisis allows investors to make more reasonable decisions.

"Publishing publishing statistics will help investors get perspectives on ratings, especially in ratings stabilization; is an integral part of productivity assessment in any CRA. This allows us to compare the performance of the CPA along with the default statistics, "Vemuri said.


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