Standardizing and Strengthening Policies on Provisional Rating by Credit Rating Agencies (CRAs) for Debt Instruments

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..... s on provisional rating, subsequent to consultation with various stakeholders, including credit rating agencies, it has been decided to prescribe as under: 2.1. Rating Symbol: All Provisional Ratings ( long term or short term ) for debt instruments shall be prefixed as Provisional before the rating symbol in all communications viz. rating letter, press release / rating rationale, etc. 2.2. Standardized Term: A rating shall be considered as provisional, and not final, when it is contingent upon occurrence following steps or execution of following documents, as applicable: a) execution of letter of comfort, corporate guarantee, or other forms of explicit third-party support; b) execution of documents such as debenture trus .....

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..... on the expiry of 180 days from the date of its issuance. 2.4. Disclosures in the press release / rating rationale: In addition to the disclosures already made by Credit Rating Agencies, the following disclosures shall be included in press release / rating rationale while assigning provisional ratings: a) pending steps/ documentation considered while assigning provisional rating. b) risks associated with the provisional nature of the credit rating, including risk factors that are present in the absence of completed documentation / steps. c) rating that would have been assigned in absence of the pending steps/ documentation considered while assigning provisional rating. In cases where the absence of said steps/ documentation wou .....

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..... ed provisional rating: In case the provisional rating assigned is not accepted by the issuer (or sponsor, in case of REITs/InvITs), then in the non-accepted ratings published by credit rating agencies on their website the following supplementary disclosures shall be provided: a) the details of the steps taken for assigning the provisional rating. For instance, in case of REITs/ InvITs, such disclosure shall contain the broad details of the assets to be housed under the Trust, the proposed capital structure, etc. b) the rating referred to in Para 2.4 (c), viz. rating that would have been assigned in absence of the said steps/ documentation. 3. This circular is issued in exercise of the powers conferred by Section 11 (1) of Sec .....

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