Sebi Proposes EL-Based Rating Scale for Municipal Bonds

Sebi proposes extending its expected loss-based rating scale to municipal bonds, which is currently used for infrastructure projects. This aims to better reflect recovery prospects and measure risk alongside standardised ratings. The regulator seeks public feedback on the proposal by April 18.

The Securities and Exchange Board of India (Sebi) has announced a proposal to extend its 'expected loss-based rating scale' for the assessment of municipal bonds.

This move, in addition to the standardised rating scale, is designed to better reflect the recovery prospects and risks associated with these bonds, typically issued by urban municipalities and local bodies to fund infrastructure projects.

Sebi, which currently employs this method for infrastructure sector projects, has invited public comments on the proposal by April 18 as part of its consultation process.

(With inputs from agencies.)