Business

Rating agencies can bypass curing period

Citing pandemic, SEBI eases norms

Taking into account the practical issues faced by companies due to the COVID-19 pandemic, the Securities and Exchange Board of India (SEBI) has allowed credit rating agencies (CRAs) to bypass the 90-day curing period to revise ratings from default to non-investment grade.

While current norms bar CRAs from revising the ratings before 90 days, few companies were able to meet their payment obligations a few days after the due date due to COVID-19-related delays.

The rating agencies were, however, not able to revise the ratings due to the regulatory framework.

“It has been noted in a few recent cases of defaults that even though the rated entity was able to correct the default within a relatively shorter span of time, the rating could not be upgraded and continued to be under sub-investment grade due to the extant provisions on post-default curing period of 90 days for the rating to move from default to speculative grade and generally 365 days for default to investment grade,” stated a SEBI circular.

The capital market watchdog has said that CRAs can deviate from the said period of 90 days on a case-to-case basis, subject to the agencies framing a detailed policy in this regard.

A letter from the Editor


Dear reader,

We have been keeping you up-to-date with information on the developments in India and the world that have a bearing on our health and wellbeing, our lives and livelihoods, during these difficult times. To enable wide dissemination of news that is in public interest, we have increased the number of articles that can be read free, and extended free trial periods. However, we have a request for those who can afford to subscribe: please do. As we fight disinformation and misinformation, and keep apace with the happenings, we need to commit greater resources to news gathering operations. We promise to deliver quality journalism that stays away from vested interest and political propaganda.

Support Quality Journalism
Recommended for you
This article is closed for comments.
Please Email the Editor

Printable version | May 28, 2020 11:07:27 PM | https://www.thehindu.com/business/rating-agencies-can-bypass-curing-period/article31644290.ece

Next Story