Pushed to (Brick) wall, bond investors dial Sebi
Investors have sought clarity from the Securities and Exchange Board of India (Sebi) regarding the status of rating actions by Brickwork Ratings after the firm sharply downgraded outstanding bonds of some companies including central public sector undertaking NLC India Ltd.
Investors have taken up the matter with Sebi citing uncertainty surrounding the matter following the market regulator's decision in October 2022 to cancel the certificate of registration given to Brickwork due to certain contraventions and deficiencies, people aware of the developments told ET. Sebi last month revoked the order directing Brickwork to shut down operations.
Rating downgrades for bonds have significant implications for profitability of financial entities such as banks and mutual funds which are investors in such securities.
Apart from NLC India, Brickwork has also downgraded outstanding bonds of Indore Municipal Corporation worth ₹190 crore, people cited above said.
'No Major Credit Events'
The bulk of the investors in those bonds were institutional players such as provident funds.
«There have been downgrades of some firms by Brickwork, such as in the case of Neyveli Lignite (now known as NLC India Ltd) which was downgraded from AAA to BB+. The rationale behind the downgrades is not clear,» one of the sources said.
«Generally, rating downgrades are a consequence of poor financial performance, but given the backdrop in this case, there is uncertainty about the rationale because there haven't been major credit events for the entities which have been downgraded,» the person said.
An email sent to senior management of Brickwork Ratings did not elicit a response till the time of going to press.
