The long term ratings are accompanied by a ‘Rating Outlook’ namely, ‘Stable’, ‘Positive’ or
‘Negative’. The ‘Rating Outlook’ is aimed at providing an expected direction of movement of the
rating within the boundaries of certain conditions considered by the analyst during the rating
exercise.
Annexure I Policy on Provisional
Ratings
Brickwork Ratings (BWR) has, in accordance with the requirements of SEBI Circular
SEBI/HO/MIRSD/MIRSD_CRADT/P/CIR/2021/554 dated 27Apr2021 on “Standardizing and
Strengthening Policies on Provisional Rating by Credit Rating Agencies (CRAs) for Debt
Instruments”, and the subsequent clarifications received from SEBI in this regard, revised its
Policy on Provisional Ratings. This revised policy is applicable to all debt instruments and
borrowing facilities including securities, bank loan facilities, commercial papers, issuer ratings
etc.¹
Assignment of Provisional Rating and Prefix
A. General applicability
BWR assigns a Provisional rating to such instruments/facilities when the rating is contingent
upon completion of the critical pending steps and/or execution of pending documentation, as
applicable. The provisional ratings assigned by BWR, on both the long-term as well as the
short-term scale, are prefixed with the word ‘Provisional’, denoting that the rating assigned to
the instrument/facility is subject to fulfilment of certain conditions/steps or execution of the
pending documentation. Such pending steps or documentation (as applicable) are as follows:
a) execution of letter of comfort, corporate guarantee, or other forms of explicit third
party support;
b) execution of documents such as debenture trustee deed/debenture trustee
agreement, legal opinions, representations and warranties, final term sheet;
c) assignment of loan pools or finalisation of cash flow escrow arrangements;
d) setting up of debt service reserve account (DSRA);
e) opening up of escrow account; or
f) for a proposed Real Estate Investment Trust (REIT) or Infrastructure Investment
Trust (InvIT), pending formation of a trust but only after receipt of SEBI
Registration. However, the process of obtaining rating may commence at the stage
of the sponsor filing with SEBI for the registration of the Trust, subject to
declaration from the sponsor to this effect being submitted to BWR. The provisional
rating indicates the final rating that is likely to be assigned to the InvIT/ REIT after
the transfer of the shareholding in the designated Special Purpose Vehicles (SPVs)
to the trust, raising of the proposed capital etc.
Normally, BWR would assign provisional ratings when key steps or documentation are
pending in case of instruments / facilities backed by credit enhancement mechanisms such as
guarantees and letters of comfort, debt backed by co-obligor structures, escrow mechanism,
DSRA, securitization transactions, REITs/InvITs pending formation of trust etc. However, even
in such circumstances, BWR may assign a final rating even if certain actions/ documents are
pending, depending on its assessment of the credit profile of the entity.
Mutual fund schemes and capital protection-oriented schemes: In respect of ratings of the
mutual fund schemes that are yet to be launched or are yet to invest in the underlying
securities or capital protection-oriented schemes that are yet to firm up their investment
portfolio, BWR may initially assign a provisional rating based on the expected credit quality and
the tenor of the securities in the mutual fund portfolio or on the proposed mix of investment in
debt instruments and in equity and subsequently convert into a final rating upon launching of
the scheme and investments made.
B. Non-applicability
BWR shall not assign a rating, including provisional rating, to an issuer/entity evaluating
strategic decisions such as funding mix for a project, acquisition, debt restructuring, scenario-
analysis in loan refinancing, etc, where a scenario based rating assignment is involved.
Rating Symbols
When BWR assigns provisional ratings, its existing long-term and short-term rating symbols will
be prefixed with the term ‘Provisional’ in all communications viz. rating letter, press release /
rating rationale, etc. For example, ‘Provisional BWR AAA’ or ‘Provisional BWR A1+’.
Validity Period
Post assigning a provisional rating, BWR shall closely follow up with the issuer/client for
confirmation of completion of pending steps and/or executed transaction documents and
issuance/raising of debt/borrowings. The issuer/entity should keep BWR informed about the
completion/execution of appropriate transaction related formalities and issuance/raising of
debt/borrowings. The provisional rating shall be converted into a final rating following receipt
of confirmation of completion of pending steps and/or executed transaction documents, as
applicable, and after vetting by BWR legal officer, within 90 days from the date of issuance of
the debt instrument/availment of borrowings. The final rating assigned by BWR shall be
dependent on the available documents or completed actions, as applicable. In case of pending
steps / documentation at the end of 90 days from the date of issuance of debt
instrument/availment of borrowings, BWR may grant an extension of upto 90 days from the
expiry of the above mentioned validity period, based on the status/progress of the pending
steps/documentation of the transaction, on a case to case basis. If such an extension is
approved, there would be no requirement to do a press release.
At the end of 180 days from the date of issuance of the instrument/availment of borrowings, an
outstanding provisional rating shall necessarily be converted into a final rating that is consistent
with the available documents or completed actions, as applicable. BWR shall not assign any
provisional ratings upon the expiry of 180 days from the date of issuance of the
instrument/availment of borrowings.
Provisional Ratings assigned to securitisation transactions: If the pending actions/documents
are not completed/executed within 180 days of assignment of the provisional rating, BWR
would withdraw the provisional rating, even if the instrument has been issued.
Conversion of Provisional Rating to Final Rating
BWR’s communications for ‘Provisional’ rating viz., Rating Letter and Press Release/Rating
Rationale, shall mention the pending conditions/steps/documentation, based on which the
provisional rating is assigned. Upon receipt of confirmation of the completion of the pending
actions and/ or execution of the pending documents, as applicable, and after vetting by BWR
legal officer, the provisional rating shall be converted into a final rating, in line with the validity
period for provisional ratings, as mentioned above, and the prefix ‘Provisional’ shall be
removed.
In case the pending actions/ documents are completed for only a portion of the rated amount,
the rating for such portion alone shall be converted into final. The rating for the remaining
portion of the rated amount would continue to remain provisional.
The final rating may be the same as the provisional rating in case the completed
steps/documentation are consistent with the expectations/assumptions based on which the
provisional rating was initially assigned. The final rating may differ from the provisional rating in
case the completed actions/executed documents are not in conformity with those envisaged
initially. To elaborate, BWR would take rating action as follows:
i) In case there are material changes in the terms of the transaction after the initial
assignment of the provisional rating and when the debt issuance /borrowing is yet to
happen.
In such cases, upon being intimated of the material changes by the issuer/entity, BWR
shall withdraw the existing provisional rating as the instrument/facility is yet to be
issued/raised, duly stating that the provisional rating is being withdrawn as there are
material changes in the terms of the transaction after the initial assignment of the
provisional rating.
ii) In case there are material changes in the terms of the transaction after the initial
assignment of the provisional rating and post the completion of the debt
issuance/borrowing (corresponding to the part that has been issued/availed).
When the terms of the transaction undergo a material change and are not in accordance
with the premise on which the provisional rating was initially assigned, BWR would
withdraw the existing provisional rating and concurrently assign a fresh final rating basis
the revised terms of the transaction. Both the withdrawal of the initial provisional rating
and the concurrent assignment of the fresh final rating would reflect in the same press
release/rating rationale.
However, in cases where the material changes have occurred due to failure of the structure to
work in the manner it was designed to or on account of factors beyond the control of the
issuer/ entity, BWR would revise the existing provisional rating based on best available
information, irrespective of whether the debt issuance/availment of borrowings has taken
place or not.²
In the case of REITs/InvITs, if there are changes in key assumptions, BWR shall obtain a
declaration from the issuer that the changes in key assumptions are consistent with its filings
with SEBI and revise² the provisional ratings appropriately. Such declaration shall also be
disclosed in the press release.
Non issuance of debt or non availment of borrowings
In cases where the documentation has not been completed and the instrument/facility has not
yet been issued/raised even at the end of 6 months from the date of assignment of provisional
rating, BWR may continue the Provisional Rating for another six months, upon receipt of a
written request from the issuer / entity for continuance of the rating in view of their intention
to complete the documentation and the fundraising within the next six months. BWR may
grant a maximum of two extensions of six months each, based on specific written requests for
each extension from the issuer/entity i.e., for a maximum of 18 months from the date of
assignment of Provisional Rating. If after the expiry of such extensions, the debt is not yet
issued/availed, then BWR would withdraw the rating.
In the absence of such written requests for extensions, the rating shall be placed on a Notice of
Withdrawal for 15 days on BWR website, whereafter the rating shall be withdrawn.
If at any point in time, the entity informs BWR that it does not intend to issue the proposed
debt instrument/ avail the proposed borrowing, the provisional rating shall be withdrawn. In
the case of REITs/ InvITs, if the sponsors do not intend to go ahead with the REIT/ InvIT
formation, the provisional rating assigned earlier shall be withdrawn.
However, in case of any material developments affecting the credit profile of the entity being
rated, BWR may review/revise² the provisional/final rating, irrespective of the status of the
steps/documentation/debt issuance or the validity period as mentioned above.
Additional disclosure requirements for Provisional ratings
In accordance with the stipulations of the aforesaid SEBI circular dated April 27, 2021,
additional disclosures shall be made in the press release / rating rationale pertaining to
Provisional Ratings as well as in the disclosures relating to Unaccepted Provisional ratings.
Details of such disclosures are given below:
Disclosures in the Press Release / Rating Rationale
BWR’s press release / rating rationale for Provisional Ratings would also disclose the following:
a) Pending steps / documentation considered while assigning the Provisional Rating.
b) Risks associated with the provisional nature of credit rating, including those on account
of absence of completed documentations / steps.
c) Rating that would have been assigned in the absence of pending steps / documentations
which were considered while assigning the provisional rating. In cases where the
absence of said steps/documentation would not result in any rating being assigned by
BWR (eg., securitisation transactions or proposed REIT/InvIT), the same would be
specified in the press release.
d) Validity period for conversion of a provisional rating into final rating, in the case of
issued debt/availed borrowing.
e) Disclosures related to REIT or InvITs, wherever applicable:
1. the broad details of the assets that are proposed to be held by REIT / InvIT, the
proposed capital structure, etc.
Receipt of an undertaking from the sponsor stating that the key assumptions
(relating to the assets, capital structure, etc.) are in consonance with the details
filed by the sponsor with SEBI.
In case of change in provisional rating due to change in aforesaid assumptions, the
press release shall state that the rating is based on a declaration from the issuer
that similar changes have been made in the filing with SEBI.
Unaccepted Provisional Rating
BWR would provide the following supplementary disclosures:
1. Details of the steps taken for assigning the provisional rating (the steps / documentation
pending which provisional rating was assigned).
2. In case of REITs/InvITs, the broad details of the assets to be housed under the Trust, the
proposed capital structure, etc.
3. Rating that would have been assigned in absence of the said steps / documentation.
¹This policy is applicable with immediate effect for all new rating assignments. The
outstanding provisional ratings shall be aligned with this revised policy by December 31,
2021.
²Any review or revision of rating refers to the likelihood of appropriate rating action which
may mean an upgrade, downgrade, change in outlook, placement of rating on credit watch
etc.
Annexure III Policy on Issuer Non Co-Operation
Ratings Surveillance/Review
BWR maintains ongoing surveillance of all its ratings for the life of the rated issue/facility and
conducts a Rating review at least on an annual basis for NCD/bonds and Bank Loan Ratings. BWR
requires the co-operation of the client for periodically providing all information, financial statements,
advising any significant developments, management changes etc. On receipt of required information,
Bankers and Trustees feedback etc. as the case may be, a rating review is carried out and the rating is
disclosed to the client and also published. A rating review is conducted at a shorter interval if the
situation so warrants.
Rating overdue for review and Issuer Non-cooperation
All ratings assigned by BWR are reviewed at least once every 12 months but can be reviewed anytime
earlier if the conditions so warrant. The following actions will be taken if BWR is unable to receive
the necessary information from the issuer during the review of ratings:
i) Where Annual Review of the Ratings assigned to Bond Issue/NCD Issue/Bank Loans, cannot
be undertaken in time for any reasons, an advisory “Delay in Periodic Review” would be
published on the BWR website immediately on the next working day. The “Rating Advisory”
would state the reasons for delay.
ii) However, even after further follow up by BWR, if there is no progress, then a review will be
undertaken based on available information and a suitable rating will be assigned. In such cases
the credit rating symbol shall be accompanied by the suffix “ISSUER NOT COOPERATING”
in the same font size. The suffix shall be explained below and shall read as ‘Issuer did not
cooperate; based on best available information’.
iii) For capital market instruments (NCDs / CPs / FDs), the movement to INC (Issuer Not Cooperating) post completion of the 12 month’s rating validity period, may be done within a
month of the rating advisory unless a further delay is explainable due to circumstances
beyond the control of the issuer.
iv) For bank loan instruments, the movement to INC may be done before the completion of 15
months from previous rating (in line with regulations), unless the client has clearly refused to
cooperate, in which case the INC action can be taken any time after the publication of rating
advisory but not later than completion of the 15 months from the previous review date..
v) An issuer/client is required to submit a “No Default Statement” (NDS) every month, which has
to be submitted to BWR at the beginning of the ensuing month for the previous month. Failure
to submit the NDS for 3 consecutive months would be considered as an act of Non-Cooperation.
vi) An issuer/client is required to pay fee agreed for providing specified rating services. Failure to
pay such fee would be considered as an act of Non-cooperation.
BWR may take a Rating action as deemed necessary by it, in case of non-cooperation by the
issuer/client.
1. If an issuer has all the outstanding ratings as non-cooperative for more than 6 months then the
rating assigned to the instrument of such issuer shall be downgraded to non-investment grade
with Issuer Not Cooperating [INC] status. If non-cooperation by the issuer continues for further
6 months from the date of downgrade to non-investment grade,The Credit Rating Agency shall
not assign any new ratings to such issuer until the issuer resumes cooperating or the rating is
withdrawn.
2. Even after moving a rating to ‘INC (Issuer Not Co-operating) Category’, if the issuer provides
surveillance mandate and the required information, fresh review can be done. Further, even
when a rating is continuing under ‘INC Category’, if public information is available on any
material events, BWR will take suo-moto notice and initiate appropriate rating action.
Annexure V Policy for Default Recognition and Post-Default Curing Period
[Ref: SEBI Cir. No. SEBI/ HO/ MIRSD/ DOS3/ CIR/ P/ 2019/ 70 dated June 13, 2019 and SEBI/ HO/ MIRSD/ CRADT/ CIR/ P/ 2020/ 87 dated May 21, 2020]
Brickwork Ratings (BWR) emphasizes on the timely recognition of default for the rated debt instruments and other Bank loans as part of its rating process. BWR’s default recognition policy is in-line with the guidelines of SEBI and RBI and is consistent with the Standard Operating Procedures for CRAs for monitoring and recognition of Defaults.
i) Default Recognition Policy
a) Instruments/Facilities that have a pre-defined repayment schedule
BWR recognizes default on the first instance of missed payment on a rated instrument. A “default” is defined as a delay in payment, as per the payment schedule provided in the agreements/documents executed between the issuer/borrower and the investor/lender. BWR recognizes even a single rupee of missed payment, or delay by a single day as default. BWR considers non-payment of financial obligations on the due-date/or as per specified terms of the agreement between the lender and the borrower as default and accordingly downgrades the rating assigned to the instrument/Bank Loan to “BWR D”, based on authentic information. Financial obligations refer to both principal and interest payments.
b) Facilities without a pre-defined repayment schedule
Default recognition on working capital bank loan facilities, which do not have a pre-defined payment schedule (like cash credit, packing credit, overdraft, letter of credit etc), is recognized if such facilities remain continuously overdrawn for more than 30 days or overdue for more than 30 days from invocation of the facility. Please refer to Item 5 for the instrument-wise definition of default.
c) Cases where grace period for debt servicing beyond the scheduled payment date is allowed by the lenders or investors
If the terms of sanction of the facility/instrument provide for a grace period to the issuer/borrower to service the debt obligations post the due date, BWR shall consider the due date for payment taking into account such grace period. This is subject to inclusion of such provision in the sanction letter/loan agreement or a written communication from the lender/investor prior to the scheduled due date. A missed or delayed payment by the issuer beyond the allowable grace period shall be treated by BWR as a default.
d)Technical Delays
In some instances, there may be delays or missed payments due to operational/technical/administrative issues and not attributable to credit issues with the issuer/borrower. These instances typically include operational issues at the lenders’ side like failure to debit the CC account on the due date, system/human errors or non-credit factors. In such instances, BWR evaluates if the delay is solely attributable to operational/technical/administrative issues and not credit related issues and whether the issuer had sufficient funds to make the payment on the due date. If BWR assesses that there is an intent, willingness and ability of the issuer to make the payment on the due date and that the delay is purely due to non-credit reasons, the missed/delayed payment will not be regarded as a default.
ii) Default on Debt Obligations not rated by BWR:
When the issuer with an outstanding BWR rating defaults on any of its other financial obligations (not rated by BWR), there could be a probability that the issuer would default on the BWR rated instrument/Bank Loan. Under normal circumstances, a default in one instrument of an issuer will lead to a default rating “BWR D” or a near default rating “BWR C” of all instruments of that issuer. In such cases, BWR shall evaluate the availability of instrument-specific risk mitigants (like external credit enhancements) or if the defaulted instrument is of different seniority from the other instruments. BWR may, based on the existence of such risk mitigating factors, conclude that instances of default on other instruments are not likely to occur in the rated instrument and hence, may not move the ratings on such instrument to BWR D/near default grade.
iii) How is a Default recognized?
BWR follows the guidelines prescribed by SEBI for Instrument wise definition of default as given below:
Fund-based facilities & Facilities with pre-defined repayment schedule
Facilities
| Rating Scale |
Definition of Default |
Term Loan
| Long Term |
A delay of 1 day even of 1 rupee (of principal or interest) from the scheduled repayment date. |
| Working Capital Term Loan |
Long Term |
A delay of 1 day even of 1 rupee (of principal or interest) from the scheduled repayment date. |
|
Working Capital Demand Loan(WCDL)
| Long Term |
A delay of 1 day even of 1 rupee (of principal or interest) from the scheduled repayment date. |
Debentures/Bonds
| Long Term |
A delay of 1 day even of 1 rupee (of principal or interest) from the scheduled repayment date. |
Certificate of Deposits (CD)/ FixedDeposits (FD)
| Short Term/Long term |
A delay of 1 day even of 1 rupee (of principal or interest) from the scheduled repayment date. |
Commercial Paper
| Short term |
A delay of 1 day even of 1 rupee (of principal or interest) from the scheduled repayment date. |
Packing Credit (pre-shipment credit)
| Short Term |
Overdue/unpaid for more than 30 days |
Buyer’s Credit
| Short Term |
Continuously overdrawn for more than 30 days. |
Bill Purchase/Bill discounting/Foreign bill discounting/Negotiation (BP/BD/FBP/FBDN)
| Short Term |
Overdue/unpaid for more than 30 days |
Fund-based facilities & No Pre-Defined Repayment Schedule
Facilities
| Rating Scale |
Definition of Default |
Cash Credit
| Long Term |
Continuously overdrawn for more than 30 days. |
| Overdraft |
Short Term |
Continuously overdrawn for more than 30 days. |
Non fund-based facilities
Facilities
| Rating Scale |
Definition of Default |
Letter of credit (LC)
| Short Term |
Overdue for more than 30 days from the day of devolvement. |
| Bank Guarantee (BG) (Performance/ Financial) |
Short Term |
Amount remaining unpaid from 30 days from invocation of the facility. |
Other Scenarios
Facilities
| Rating Scale |
Definition of Default |
When rated instrument is rescheduled:
| |
Non-servicing of the debt (principal as well as interest) as per the existing repayment terms in anticipation of a favourable response from the banks of accepting their restructuring application/ proposal shall be considered as a default. Rescheduling of the debt instrument by the lenders prior to the due date of payment will not be treated as a default unless the same is done to avoid default or bankruptcy. |
Curing Period #
| |
90 days for default to speculative grade and generally 365 days for default to investment grade. |
Note:
# BWR may deviate from the stipulated curing period in cases where the fundamental credit profile of the defaulting entity undergoes a material improvement, while being within the curing period window. Such instances are elaborated later in this document.
IV) Reschedulement of Debt:
BWR does not treat reschedulement of a debt obligation with investor consent prior to the upcoming scheduled payment/maturity date as default provided the debt servicing had been timely till the time the lenders provide the consent to the rescheduling and that the reschedulement was not done to avoid a default/bankruptcy. Under such a scenario, BWR would consider the new payment schedule for its assessment of credit risk and review the ratings appropriately. BWR would also take cognizance of the factors that necessitated the obligor to reschedule its debt and the circumstances that led the investor to provide its consent.
V) Factoring in past defaults
In rare circumstances, if BWR becomes aware of the delays that have occurred in the past and have not been recognized by way of a ‘BWR D’ rating, the delay shall be recognised by downgrading the rating to ‘BWR D’. If the default has been subsequently cured, the rating may be simultaneously upgraded to a non- BWR D rating, in line with the curing period guidelines.
VI) Instrument backed by guarantee
Default recognition is generally based on the structured payment mechanism mentioned in the guarantee document. In case of instruments backed by guarantee from a third party and where there is a clearly defined payment mechanism post invocation of the guarantee, BWR shall recognise default upon non-payment of the obligations within the timelines mentioned in such payment mechanism.
In case of guarantees extended for bank facilities, normally no structured payment mechanism is defined. In such cases, irrespective of invocation of the guarantee, if there is a missed payment, BWR would recognise default on the said facility/instrument.
VII) Hybrid Instruments
In case of hybrid instruments, any missed/deferred payments are recognised as default, even if such instances are permitted as per the terms of the hybrid instrument.
VIII) Post Default Curing Period Policy
The curing period principle for default category ratings will apply to fresh rating assignments as well as surveillance assignments and usually are at an issuer level. If BWR is rating an issuer afresh, a non-default rating would not be assigned if the curing period post an earlier default on any instrument of similar seniority has not been completed. For the successful completion of the curing period, the account should be regular and the issuer should have serviced the debt and interest for all instruments on a timely basis for at least 90 days post the regularization of the most recent default. Only post successful completion of the curing period, a non-default rating can be assigned.
In respect of facilities/ instruments downgraded to default category, post which the issuer’s debt is restructured/ rescheduled such that a revised payment schedule becomes applicable, the curing period would be considered to have commenced from the date when the loan restructuring/ rescheduling is approved, and not from the cut off/ reference date from which the restructuring became effective.
However, for ratings on subordinated or hybrid bonds, since a default on such instruments may not necessarily imply a default by the issuer for senior instruments, the curing period will apply at the instrument level. In case of default on subordinated or hybrid instruments, ratings on senior instruments may not be upgraded during the curing period for subordinated and hybrid instruments.
If a rated instrument has credit enhancement or there is a structure around the cash flows, the curing period will apply at instrument level, as default by issuer on other instruments may not imply or lead to default on such an instrument.
On successful completion of the curing period of 90 days, generally a sub-investment grade rating will be assigned to the outstanding instruments / facilities of the issuer. For ratings to be upgraded to investment grade, typically the issuer should have been servicing the debt and interest for all instruments on a timely basis for 365 days and should have the credit profile of an investment grade entity.
The check for completion of curing period will be:
. Clear statement of timely servicing of principal and payment of interest for 90 days from bankers (for bank loans) and debenture trustees or IPAs (for capital market instruments).
. A clear statement from the banker that the account continues to be standard for the preceding 3 months.
. 3 months NDS from the issuer.
. 3 months bank statements (CC and term-loan statements) from all bankers of the entity showing timely payments and overdrawals in CC account, if any, being regularized within 30 days
An entity’s rating may continue to be rated as BWR D even after completion of the minimum curing period if in BWR’s assessment, the entity may slip to the default status over the short term after a temporary period of regularisation in debt servicing.
Exceptions to policy:
The general curing period of 90 days for a sub-investment grade rating and 365 days for an investment grade rating may be deviated from, if the issuer can establish that there is a structural improvement in the credit profile of the issuer from the time that it went into default. Some of the instances where such a deviation may be allowed are:
. Infusion of capital into the entity, substantially improving its liquidity profile
. Merger/takeover of the entity by a stronger entity or change in ownership of the entity
. Regulatory / government action, favorably impacting the entities cash flows
. Restructuring of facilities of the entity, substantially improving its liquidity position
. Technical nature of defaults on account of procedural or system issues, human errors or non credit related factors
. Removal of the circumstances that lead to the default of the entity (including force majeure events), thereby improving the visibility of cash flows
Annexure VI Policy for Management Interaction and Site Visits
Brickwork Ratings (BWR) understands the value of interaction with the management of the
company/client while undertaking the rating of a client/borrower. The rating team would follow the
following guidelines for the new clients and already rated clients that are in the active category and
not in INC category.
New clients
- For new clients who have approached BWR for a rating for the first time, it is
important to understand the management and the facilities of the company
(especially in the manufacturing segment). For such new clients following policies will
generally be followed and exceptions to these will be presented to the rating
committee with the reasons thereof.
- The rating team should interact with the management of the company in all cases.
These interactions can be through the virtual modes like teleconference or
videoconference for the lower rated companies (‘BBB’ category or below). However,
for higher rated companies (‘A’ category and above), any member of the analytical
team should preferably have a physical meeting with the company management,
where feasible.
- Further, for manufacturing companies that are setting up a new plant (Greenfield
projects) and don’t have a history of operations, a member of BWR should preferably
visit the manufacturing facilities of the company. While, these site visits can also be
undertaken in companies with existing operations, they are less critical given the track
record of operations. For Greenfield projects, where site visits are not feasible, the
rating team should seek a TEV report from the company or a visit Report by an
independent qualified professional.
Existing clients
- For existing clients, the rating team should interact with the management of the
company at least once a year. The principles of physical meeting vs virtual meeting
remain the same as for new clients. Further, for higher rated companies (as defined
above), the rating team should interact with the management of the company
through teleconference or video conference, at least once every 6 months to
understand the performance of the company. In addition to these, interactions may
be necessitated based on events that have an impact on the credit profile of the
company. These may also be undertaken through a physical meeting or virtual
interaction depending on the mutual convenience of the rating team and the
company management.
- All physical meetings can happen at the company’s offices / facilities, BWR offices or
any mutually convenient place.
- Management Interaction/visit report should be prepared and shared by the
concerned official with the concerned analyst and CP/CCP for information and needful
action and for placing it in the clients folder/file in BCRISP.
Annexure VII Rating Outlook
Description of Rating Outlook
The long term ratings are accompanied by a ‘Rating Outlook’ namely, ‘Stable’, ‘Positive’ or
‘Negative’. The ‘Rating Outlook’ is aimed at providing an expected direction of movement of the
rating within the boundaries of certain conditions considered by the analyst during the rating
exercise.
Standard Descriptors:
| Rating Outlook |
Implication |
| Stable |
As per current assessment, the rating is likely
to remain at the same position in the
medium term |
| Positive |
As per current assessment, the rating is likely
to move upwards in the medium term subject
to realisation of certain conditions |
| Negative |
As per current assessment, the rating is likely
to move downwards in the medium term
subject to realisation of certain conditions |
26 December 2022
