Standardisation of Rating Scales Used by Credit Rating Agencies (CRAs)

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....tions for ratings of instruments having explicit credit enhancement feature. 2. In supersession of Section B of SEBI circular numbered SEBI/HO/MIRSD /MIRSD_CRADT /P/CIR/2021/594 dated July 16, 2021, the following guidelines are prescribed with regard to standardisation of rating scales used by CRAs: 2.1. CRAs, in terms of Regulation 9(f) of SEBI (Credit Rating Agencies) Regulations, 1999 ("CRA Regulations"), undertake ratings of various financial instruments under the guidelines of different financial sector regulators or authorities. 2.2. In order to standardise the usage of rating scales, CRAs are advised to align their rating scales with the rating scales prescribed under the guidelines of respective financial sector....

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....lowing standard descriptors shall be specified for "Rating Watch" and "Rating Outlook": 3.2.4. Standard descriptors to be used for when an issuer / security is placed on "Rating Watch": 3.2.4.1. "Rating Watch with Positive Implications" 3.2.4.2. "Rating Watch with Developing Implications" 3.2.4.3. "Rating Watch with Negative Implications" 3.2.5. Standard descriptors to be used for when an issuer / security is placed on "Rating Outlook": 3.2.5.1. Stable 3.2.5.2. Positive 3.2.5.3. Negative 3.3. Ratings of Capital Protection Oriented Schemes: Pursuant to the consultation with stakeholders, and in line with the industry practice, it is reiterated that for ratings o....

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....ve CRA's first name as prefix AAA - Issuers with this rating are considered to have the highest degree of safety regarding timely servicing of debt obligations. Debt exposures to such issuers carry lowest credit risk. AA - Issuers with this rating are considered to have high degree of safety regarding timely servicing of debt obligations. Debt exposures to such issuers carry very low credit risk. A - Issuers with this rating are considered to have adequate degree of safety regarding timely servicing of debt obligations. Debt exposures to such issuers carry low credit risk. BBB - Issuers with this rating are considered to have moderate degree of safety regarding timely servicing of debt obligations. Debt exposures to such issuers....