POLICY ON PROVISIONAL RATINGS



Definition

The ‘provisional’ rating shall mean rating of debt instruments in cases where certain compliances that are crucial/critical to the assignment of credit rating are yet to be complied with or certain documentations remain to be executed at the time of rating. To illustrate, these documents/compliances may include execution of guarantee deed, opening of escrow account, appointment of Debenture Trustee, setting up of a Debt Service Reserve Account (DSRA), etc. Once the compliances are met in line with the agreed terms, the provisional rating gets converted into final rating.

Disclosure of Provisional Ratings

In accordance with the directive of Securities and Exchange Board of India (SEBI) vide its Circular no. MIRSD-4/AS/NS/CRA/12621/2015 dated May 6, 2015, the provisional long term and short term ratings shall now carry a prefix ‘Provisional’ placed before the assigned credit rating indicating that the rating assigned to the instrument concerned is subject to certain compliances and/or execution of some documentation. The said SEBI circular mandates to standardise the term, rating symbol and manner of disclosure with regard to ‘conditional/provisional/ in-principle’ ratings assigned by Credit Rating Agencies in India. The provisional nature of rating shall be disclosed in all the communications pertaining to that instrument, including the rating communication letter and the rating rationale.

Symbol for Provisional Rating

The symbolic representation of Infomerics Ratings’ provisional ratings shall be as under:

 Symbol for Provisional Rating

 Provisional [IVR] .........

Disclosure of compliances pending

The conditions and steps/documents pending, which form the basis for assigning a provisional rating shall be disclosed for the information of investors/lenders. The conversion of provisional rating into final rating shall also be disclosed no sooner after completion of the pending compliances and/or execution of documentation.

Time period for completion

Normally a time period of 90 days is allowed to the Issuer for completing the various documentation related requirements.In case the required documents are not received within 120 days from the date of public release of the rating rationale pertaining to assignment of the provisional ratings, Infomerics Ratings shall take a view whether to place the provisional ratings on ‘Watch’ for the next 60 days, or to revise the provisional ratings depending upon the circumstances so warrant. If the instrument to which the provisional rating is assigned is not assigned the final rating within 120 days from the date of public release of the provisional rating, the intention of the issuer shall be ascertained with regard to completion of the compliances and/or documentation and accordingly, an appropriate decision shall be taken i.e. either to withdraw the provisional rating or extend the validity of the rating for an additional period of maximum 60 days. In case the required documents/compliances are not completed by the issuer even within 180 days (including the extension period of 60 days) from the date of public release of the provisional rating, Infomerics Ratings shall withdraw the provisional rating so assigned.

Definition

The ‘provisional’ rating shall mean rating of debt instruments in cases where certain compliances that are crucial/critical to the assignment of credit rating are yet to be complied with or certain documentations remain to be executed at the time of rating. To illustrate, these documents/compliances may include execution of guarantee deed, opening of escrow account, appointment of Debenture Trustee, setting up of a Debt Service Reserve Account (DSRA), etc. Once the compliances are met in line with the agreed terms, the provisional rating gets converted into final rating.

Disclosure of Provisional Ratings

In accordance with the directive of Securities and Exchange Board of India (SEBI) vide its Circular no. MIRSD-4/AS/NS/CRA/12621/2015 dated May 6, 2015, the provisional long term and short term ratings shall now carry a prefix ‘Provisional’ placed before the assigned credit rating indicating that the rating assigned to the instrument concerned is subject to certain compliances and/or execution of some documentation. The said SEBI circular mandates to standardise the term, rating symbol and manner of disclosure with regard to ‘conditional/provisional/ in-principle’ ratings assigned by Credit Rating Agencies in India. The provisional nature of rating shall be disclosed in all the communications pertaining to that instrument, including the rating communication letter and the rating rationale.

Symbol for Provisional Rating

The symbolic representation of Infomerics Ratings’ provisional ratings shall be as under:

 Symbol for Provisional Rating

 Provisional [IVR] .........

Disclosure of compliances pending

The conditions and steps/documents pending, which form the basis for assigning a provisional rating shall be disclosed for the information of investors/lenders. The conversion of provisional rating into final rating shall also be disclosed no sooner after completion of the pending compliances and/or execution of documentation.

Time period for completion

Normally a time period of 90 days is allowed to the Issuer for completing the various documentation related requirements.In case the required documents are not received within 120 days from the date of public release of the rating rationale pertaining to assignment of the provisional ratings, Infomerics Ratings shall take a view whether to place the provisional ratings on ‘Watch’ for the next 60 days, or to revise the provisional ratings depending upon the circumstances so warrant. If the instrument to which the provisional rating is assigned is not assigned the final rating within 120 days from the date of public release of the provisional rating, the intention of the issuer shall be ascertained with regard to completion of the compliances and/or documentation and accordingly, an appropriate decision shall be taken i.e. either to withdraw the provisional rating or extend the validity of the rating for an additional period of maximum 60 days. In case the required documents/compliances are not completed by the issuer even within 180 days (including the extension period of 60 days) from the date of public release of the provisional rating, Infomerics Ratings shall withdraw the provisional rating so assigned.