Regulatory Alerts2025-05-15
Rating of Municipal Bonds on the Expected Loss (EL) based Rating Scale
The Securities and Exchange Board of India (SEBI) has authorized Registered Credit Rating Agencies to apply an Expected Loss (EL) based Rating Scale for municipal bonds financing infrastructure assets. This directive, issued via Circular SEBI/HO/DDHS/DDHS-PoD-2/P/CIR/2025/70, allows EL ratings to be used alongside standardized scales to better reflect recovery prospects for these instruments. The regulation takes immediate effect under the powers conferred by Section 11(1) of the SEBI Act, 1992, to protect investor interests and promote market development.
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