Sebi eases 90-day curing period norm for defaulting firms post-downgrade.

by mehekkaoberoi
  • The Securities and Exchange Board of India (Sebi) has relaxed the 90-day required curing period following a default rating, as such cases are likely to rise in the wake of the Covid-19 pandemic.
  • Under the existing framework, after a default is cured and the payments regularised, a rating agency shall generally upgrade the rating from default to non-investment grade (speculative grade) after a period of 90 days, based on a satisfactory performance by the company during this period.
  • In its circular, Sebi said rating agencies may deviate from the period of 90 days on a case-to-case basis, subject to rating agencies framing a detailed policy in this regard.
  • Sebi said these policies can be used to factor in scenarios such as technical defaults, change in management, acquisition by another firm, sizeable inflow of long-term funds, or benefits arising out of a regulatory action, etc. which fundamentally alter the credit-risk profile of the defaulting firm.
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