Bonds/Long Term Capital Market Instruments
CRISIL has rated corporate bonds since 1987. We are the undisputed market leader, with two in every three of India’s corporate bonds bearing CRISIL’s rating.
CRISIL assesses bonds (of maturity greater than a year) on the same principles as corporate sector instruments, in general. Ratings are assigned on a long term scale (AAA to D).
Our insightful analysis and opinion of corporate bond issuers is valued by investors. As a result, CRISIL has the distinction of having amongst the best bond spreads in high investment grade rating categories.
CRISIL has rated a variety of bonds/long term debt capital market instruments, ranging from plain vanilla debentures to hybrid instruments such as optionally convertible debentures, foreign currency convertible bonds etc., issued by Indian corporates.
CRISIL has also been part of key innovations in the Indian corporate bonds market, having rated pioneering credit instruments to facilitate long term funding for corporates. Some examples:
- 50 year bond with bullet maturity issued by M&M in 2013
- Perpetual bonds issued by Tata Power
- Inflation indexed bonds
CRISIL’s rating methodology has been fine-tuned to not only assign ratings, but also determine the equity treatment for hybrid instruments with complex features such as varying tenures, multiple call options, step up coupon, etc.
The following table explains the rating scale for our bonds/LT instrument.
|Instruments with this rating are considered to have the highest degree of safety regarding timely servicing of financial obligations. Such instruments carry lowest credit risk.|
|Instruments with this rating are considered to have high degree of safety regarding timely servicing of financial obligations. Such instruments carry very low credit risk.
|Instruments with this rating are considered to have adequate degree of safety regarding timely servicing of financial obligations. Such instruments carry low credit risk.|
Instruments with this rating are considered to have moderate degree of safety regarding timely servicing of financial obligations. Such instruments carry moderate credit risk.
|Instruments with this rating are considered to have moderate risk of default regarding timely servicing of financial obligations.|
|Instruments with this rating are considered to have high risk of default regarding timely servicing of financial obligations.|
(Very High Risk)
Instruments with this rating are considered to have very high risk of default regarding timely servicing of financial obligations.
|Instruments with this rating are in default or are expected to be in default soon.|
- CRISIL may apply '+' (plus) or '-' (minus) signs for ratings from 'CRISIL AA' to 'CRISIL C' to reflect comparative standing within the category.
- CRISIL may assign rating outlooks for ratings from 'CRISIL AAA' to 'CRISIL B'. Ratings on Rating Watch will not carry outlooks. A rating outlook indicates the direction in which a rating may move over a medium-term horizon of one to two years. A rating outlook can be 'Positive', 'Stable', or 'Negative'. A 'Positive' or 'Negative' rating outlook is not necessarily a precursor of a rating change.
CRISIL may place an outstanding rating on Rating Watch if the issuer announces a merger or acquisition, or de-merger of some business that may impact the credit profile of the rated debt instrument. Ratings may also be placed on watch if the issuer’s credit profile is impacted on account of an action by regulators, or when the impact of specific events on the credit profile cannot be accurately assessed at the point when they occur, and additional information may be necessary for CRISIL to fully ascertain the creditworthiness of the rated instrument. CRISIL may place a rating on watch, with positive, negative or developing implications. A listing under rating watch does not imply that a rating will necessarily change, nor is it a prerequisite for rating change.
- A suffix of 'r' indicates investments carrying non-credit risk.
- The 'r' suffix indicates that payments on the rated instrument have significant risks other than credit risk. The terms of the instrument specify that the payments to investors will not be fixed, and could be linked to one or more external variables such as commodity prices, equity indices, or foreign exchange rates. This could result in variability in payments, including possible material loss of principal, because of adverse movement in value of the external variables. The risk of such adverse movement in price/value is not addressed by the rating.
- CRISIL may assign a rating of 'NM' (Not Meaningful) to instruments that have factors present in them, which render the outstanding rating meaningless. These include reorganisation or liquidation of the issuer, the obligation being under dispute in a court of law or before a statutory authority.
- A prefix of 'PP-MLD' indicates that the instrument is a principal-protected market-linked debenture. The terms of such instruments indicate that while the issuer promises to pay back the face value/principal of the instrument, the coupon rates of these instruments will not be fixed, and could be linked to one or more external variables such as commodity prices, equity share prices, indices, or foreign exchange rates.
- A prefix of 'Provisional' indicates that the rating centrally factors in the completion of certain critical steps/documentation by the issuer for the instrument, without these the rating would either have been different or not assigned ab initio.