Standardisation of Rating Symbols and Definitions

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CIR/MIRSD/4/2011 June 15, 2011
All Credit Rating Agencies Registered with SEBI
Dear Sirs,
Sub: Standardisation of Rating Symbols and Definitions
1. It has been observed that the Credit Rating Agencies (CRAs) registered with
SEBI use different rating symbols and definitions.
2. It has been felt that there need to be common rating symbols and definitions
(i) for easy understanding of the rating symbols and their meanings by the
investors, and (ii) to achieve high standards of integrity and fairness in
ratings.
3. The issue was discussed in the meeting of Corporate Bonds and
Securitisation Advisory Committee of SEBI. The Committee recommended
that the rating symbols and their definitions should be standardised.
4. Pursuant to the above, in consultation with the CRAs and considering the
international practices, standardised symbols and their definitions have been
devised for the following:
a) Long term debt instruments;
b) Short term debt instruments;
c) Long term structured finance instruments;
d) Short term structured finance instruments;
e) Long term mutual fund schemes; and
f) Short term mutual fund schemes.
5. The new symbols and definitions as given in Annexures 1-6 shall henceforth
be used for the new ratings/ reviews by the CRAs.
6. For existing outstanding ratings, the CRAs shall:
(i) disclose new rating symbols and definitions on their websites;
(ii) update their rating lists on their websites; and
(iii) inform their clients about the change in the rating symbols and
definitions and specifying that this should not be construed as a
change in the ratings. 2 of 8
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Securities and Exchange Board of India
7. The CRAs shall ensure compliance with the requirements specified at Clause
6 above, as early as possible but not later than 4 months from the date of
issuance of this circular.
8. The CRAs shall communicate to SEBI, the status of the implementation of the
provisions of this circular by October 31, 2011. They shall also place the
compliance status of this circular before their Boards.
9. This circular is issued in exercise of the powers conferred by Section 11 (1) of
Securities and Exchange Board of India Act, 1992 read with the provisions of
regulations 13, 18 and 20 of SEBI (Credit Rating Agencies) Regulations, 1999
to protect the interest of investors in securities and to promote the
development of, and to regulate, the securities market.
Yours faithfully,
Prasanta Mahapatra
Deputy General Manager
Tel. No: 022-26449313
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Encl: as above