SEBI makes a colour-coded 'Credit Risk-o-Meter' mandatory for debt securities

SEBI has introduced a 'Credit Risk-o-Meter' as a mandatory disclosure for debt securities, requiring issuers and Online Bond Platform Providers (OBPPs) to display a colour-coded pictorial meter showing the credit risk of a debt security in the offer document, abridged prospectus, private placement memorandum, and in all advertisements and on OBPP web and mobile platforms. The meter maps SEBI's existing credit-rating framework (symbols from AAA to D) onto six risk levels, each with its own colour, from Irish Green for the lowest-risk AAA-rated paper to progressively warmer colours for riskier grades. The circular inserts a new Chapter II-C into SEBI's Master Circular for issue and listing of Non-Convertible Securities, Securitised Debt Instruments, Security Receipts, Municipal Debt Securities and Commercial Paper, and applies to public issues as well as private placements of these instruments.

Stock exchanges and depositories have been directed to put systems in place for implementation, amend their bye-laws where necessary, and notify issuers. The circular is issued under Section 11(1) of the SEBI Act, 1992, read with Regulation 55(1) of the SEBI (Issue and Listing of Non-Convertible Securities) Regulations, 2021, to protect investors and regulate the securities market. It takes effect 45 days from issuance.