Rating of Municipal Bonds on the Expected Loss (EL) based Rating Scale
Summary
SEBI permits Registered Credit Rating Agencies to use an Expected Loss based Rating Scale for Municipal Bonds financing infrastructure assets. This extension applies in addition to the standardized rating scale or Probability of Default Rating to better reflect recovery prospects. The circular takes immediate effect and is issued under Section 11(1) of the SEBI Act read with Regulation 20 of CRA Regulations.
Text
CRAs may, in addition to the standardised rating scale, extend the EL-based Rating Scale for rating of Municipal Bonds which are issued for financing infrastructure assets.
This circular shall be applicable with immediate effect.
This circular is issued with the approval of competent authority, 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 20 of CRA Regulations to protect the interest of investors in securities and to promote the development of, and to regulate, the securities market.
Source: SecMarx — Rating of Municipal Bonds on the Expected Loss (EL) based Rating Scale. Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.