Mumbai: The Securities and Exchange Board of India Wednesday introduced a mandatory colour coded credit risk-o-meter for debt securities in a move aimed at making credit risk easier for potential investors.
The meter will translate Sebi's existing credit rating framework into six colour-coded risk categories, ranging from "lowest credit risk" for AAA-rated securities to "high to very high risk of default" for securities rated B+ to D. The categories in between include very low, low, moderate credit risk and moderate risk of default.
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The new disclosure mechanism would have to be included in offer documents, abridged prospectus, private placement memorandums, advertisements and the web and mobile channels of online bond platform providers (OBPPs).
The capital-markets regulator said the framework would apply to all listed and proposed to be listed non-convertible securities, commercial papers, securitised debt instruments, security receipts and structured debt or market linked debentures, irrespective of whether they are issued through a public issue or private placement.
Issuers and OBPPs would also have to disclose the name of the credit rating agency and the actual rating below the meter.
For unsecured debt instruments, the word "unsecured" must be displayed in bold red text. Where a security carries ratings from multiple agencies, the meter will reflect the lowest rating.
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For securities where the rating agency has classified the issuer as "Issuer Not Cooperating", the meter would specifically indicate the status. Sebi has also prescribed separate disclosures for short-term debt instruments.
Sebi has also asked issuers to incorporate a disclaimer in the offer document stating that the credit risk-o-meter is based on an evaluation of the credit risk of the issuer and does not constitute investment advice.
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Sebi unveils six-tier credit risk-o-meter for debt securities
The Securities and Exchange Board of India is introducing a mandatory colour coded credit risk-o-meter for debt securities. This new meter categorizes credit risk into six color-coded levels, indicating risk levels accurately. Issuers and online bond platforms will need to adopt these disclosures in their documentation. The measures aim to improve transparency in the investment process for…
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- The Economic Times
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- 328 words · 1 min
Where this came from
This story was reported and first published by The Economic Times on 7 October 2026. HUE Legacy Ventures did not write it.
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