Review of provisions regarding valuation of debt and money market instruments due to the COVID - 19 pandemic.
Summary
This circular provides temporary relief for the valuation of debt and money market instruments during the COVID-19 pandemic. It allows valuation agencies to exclude restructuring solely due to pandemic stress from being classified as default. The modified provisions are effective until December 31, 2020.
Text
any proposal of restructuring received by Debenture Trustees shall be communicated to investors immediately... any proposal received by Mutual Funds from lenders/issuer/Debenture Trustees shall be reported immediately to the valuation agencies (along with the other material information required for the purpose of valuation), Credit Rating Agencies and AMFI. AMFI, on receipt of such information, shall immediately disseminate it to its members.
if the valuation agency... is of the view that the proposed restructuring is solely due to fallout of COVID-19 pandemic then the valuation agency may not consider the restructuring / non receipt of the dues as a default for the purpose of valuation of money market or debt securities held by Mutual Funds.
valuation agencies shall ensure that change in terms of investment, financial stress of the issuer and the capability of issuer to repay the dues/borrowings on the extended dates are reflected in the valuation of the securities.
if there is any difference in the valuation of securities provided by two valuation agencies, the conservative valuation shall be accepted.
The above modifications permitted to SEBI Circular dated September 24, 2019 shall be in force till December 31, 2020.
AMCs shall continue to be responsible for true and fairness of valuation of securities.
Source: SecMarx — Review of provisions regarding valuation of debt and money market instruments due to the COVID - 19 pandemic.. Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.