Legal UpdatesSecurity Laws

SEBI provides relaxation to Credit Rating Agencies only for lenders/ investors who are defaulting in restructuring of debt solely due to COVID -19

SEBI Updates

SEBI provides  relaxation  to  Credit  Rating  Agencies  in recognition  of  default  for restructuring by the lender/ investors solely due to COVID -19 related stress. 

The discretion is with the  valuation agencies engaged by AMCs / AMFI for  recognition of default  in  case proposals  of restructuring of debt are solely  due  to  COVID-19 related  stress.  For  the  said  purpose,  any  proposal  of restructuring  received  by  Debenture  Trustees  should be  communicated  to  investors immediately.     Further,     any     proposal     received     by     Mutual     Funds     from lenders /issuer/Debenture  Trustees  should 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, should immediately disseminate it to its members.

Further,  if  the  valuation  agency,  based  on  its  assessment  of  the  proposal ,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.  Further,  valuation  agencies  should  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. In case there is any difference in the valuation of securities  provided  by two  valuation  agencies,  the  conservative  valuation  should  be accepted.

The above modification would be in force till December 12, 2020. 

 

 

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