SEBI eases rating norms for debt; grants quicker market access after buyback
Photo Credit: Reuters

The capital markets regulator has asked valuation agencies to avoid assigning a default rating for debt securities held by mutual funds in case they come under pressure from the lockdown or the three-month loan repayment breather in place since 1 March.

The Securities and Exchange Board of India (SEBI) has also allowed firms to raise fresh funding from public markets six months after a buyback instead of one year earlier. 

The relaxation, which will come into effect immediately, will apply till year-end.

For debt securities, SEBI has also told agencies to accept the more conservative valuation in case they come up with different ratings.

The relaxations may offer some relief to mutual funds challenged by volatility in India’s bond markets over the past two months as Covid-19 lockdown and restrictions have prompted emergency moves including sharp cuts in interest rates

These relaxations announced by SEBI on Thursday coincide with Indian company Franklin Templeton Mutual Fund shutting six of its open-ended debt funds the same day, bringing to a halt all purchases and redemptions by investors with immediate effect.

Franklin’s six debt funds have a combined asset under management of Rs 25,856 crore.

SEBI has also extended the timeline for annual general meetings (AGMs) of top 100 listed companies till September 30, effectively allowing five months to companies whose financial years end on 31 March and nine months to those whose financial years end on 31 December.

Coronavirus, which originated in China late last year, has spread rapidly across the world, infecting more than 2.7 million people and killing over 190,000.

In India, the virus has spread over the past couple of weeks to more than 23,500 people and has killed 722. 

The pandemic has prompted several countries to impose partial or complete lockdowns, disrupting almost all economic and business activities. India is under a lockdown till 3 May.

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