Govt mulls credit enhancements for corp bonds
The official said market regulator Sebi along with Reserve Bank of India, insurance regulator and pension fund regulator will call a meeting of the “top four credit rating agencies soon to work out the modalities for credit rating of infrastructure projects executed by special purpose vehicles (SPVs) whereby a separate methodology for rating of the project will be examined”.
He said the credit rating of the project is likely to be based on the revenue streams accruing to the project along with standing of the promoters and sponsors of the project. The finance ministry has already written to all three regulators for examining the practice in other countries regarding the credit enhancement of bonds so that further steps can be taken, the official said.
The proposal has the full support of the finance ministry, but it has not found favour with the central bank and has partly been supported by Sebi.
Investment grade means the quality of a company’s credit. For being considered as an investment grade bond, the company has to be rated at least
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