SEBI has asked rating agencies not to consider restructuring of debt and non-receipt of dues solely due to COVID-19 related stress as a default.
“If the valuation agency, based on its assessment of the proposal, is of the view that the proposed restructuring is solely due to fallout of COVID-19 pandemic, then the valuation agency may not consider the restructuring/non receipt of the dues as a default for the purpose of valuation of money market or debt securities held by MFs,” SEBI said in a circular.
Earlier this year, SEBI had provided similar relaxation to credit rating agencies.
Further, explaining the role of valuation agencies, SEBI said in the recent circular that these agencies have to ensure that change in terms of investment, financial stress of the issuer and the capability of issuer to repay the dues on the extended dates are reflected in the valuation of the securities.
If there is any difference in the valuation of securities provided by two valuation agencies, the conservative valuation will be accepted, SEBI said.
Further, the market regulator said that any proposal received by fund houses from lenders or issuers or debenture trustees have to be reported immediately to the valuation agencies, credit rating agencies and AMFI. After that the industry body will immediately disseminate it to its members.
The relaxations will be in force till December 31, 2020.
