Policy for placing ratings on Rating Watch

Policy for Placing Ratings on Rating Watch

There could be many developments that may take place in the affairs and functioning of various rated entities, the implication on debt servicing ability of which may have to be further examined. These developments include announcement for merger, demerger, taking over of a company, announcement/ implementation of a large project, sale or acquisition of equity stake in the company or asset monetization, change of management, resignation of key managerial personnel etc.

In such cases, Infomerics initiates a review exercise with a view to assess the impact of such developments on the future debt servicing ability of the company. Wherever Infomerics feels that assessment of the impact of the development requires further information/clarifications and believes, prima-facie that such assessment might possibly result in change in rating, Infomerics places such rating under Rating Watch. Such rating watch may be of three kinds:

• ‘Rating watch with positive implication’ (when there is a possibility of an upgrade) or
• ‘Rating watch with negative implication’ (when there is a possibility of a downgrade)  or
• where the direction of the implication is not clear or may be subject to emerging developments, then the rating may be placed on ‘Rating Watch with developing implications’.  

Once the desired information is received and evaluation exercise is completed, the entity’s ratings  may, either continue on watch or be removed from Rating watch and assigned an appropriate rating. It may be noted that placing ratings on watch does not always imply an imminent change in rating. Similarly, ratings that are not on watch may, if circumstances so warrant, be upgraded or downgraded without first being placed on Rating Watch.  The time frame for resolving ratings under rating watch would generally be ranging between 45 to 90 days.

Few other aspects of rating watch are:

1. Ratings placed on watch do not carry an outlook.
2. In case of developments warranting a watch, both long term and short term ratings may be placed on watch

Updated on July 07, 2025

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