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CS Professional · Strategic Management and Corporate Finance · Role of Intermediaries in Fund Raising

Which of the following is a requirement that applies where a company issues rated debt securities to the public under the SEBI regime?

The issuer must obtain a rating from at least one SEBI-registered credit rating agency and disclose it in the offer document. Disclosure is required regardless of the grade, the issuer and not the trustee commissions the rating, and ratings are kept under periodic surveillance rather than lasting for life.

  1. AThe credit rating need not be disclosed if it is below investment grade
  2. BThe issuer must obtain a rating from at least one registered credit rating agency and disclose it in the offer documentCorrect
  3. COnly the debenture trustee may obtain the rating on behalf of the investors
  4. DThe rating is valid for life and need not be reviewed

Explanation

Public issues of debt securities require a rating from a SEBI-registered credit rating agency, and the rating, with its rationale, must be disclosed in the offer document, irrespective of grade. Ratings are kept under surveillance and revised by the agency, so a lifetime validity is wrong.

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