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Non-cooperative rating over 6 months to trigger downgrade

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New Delhi, Jan 3 (IANS) Market regulator SEBI on Friday directed the Credit Rating Agencies (CRAs) to downgrade the rating assigned to firms or instruments to non-investment grade, with issuer not cooperating (INC) status from July 1, if an issuer has all the outstanding ratings as non-cooperative for over 6 months.

CRAs define non-cooperation by issuers as when they don’t provide adequate information to conduct a rating exercise or in case of non-payment of fees by the issuer for the review.

The SEBI said if non-cooperation by the issuer continues for another six months from the date of downgrade to non-investment grade, no new ratings to such issuer should be assigned (effective immediately) until the issuer resumes cooperation or the rating is withdrawn.

However, in case of multiple ratings on an instrument (where there is no regulatory mandate for multiple ratings), a “CRA may withdraw a rating earlier (effective immediately) than stipulated in the aforementioned circular, provided the CRA has rated the instrument continuously for 3 years or 50 per cent of the tenure of the instrument, whichever is higher..”

The CRA can also this if it “received No-objection Certificate (NOC) from 75 per cent of bondholders of the outstanding debt for withdrawal of rating, and received an undertaking from the issuer that another rating is available on that instrument,” SEBI said in a circular.



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