SEBI Seeks Public Comments on Proposal to Extend Use of ‘Expected Loss-Based Rating Scale’ for Municipal Bonds
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- By Chetan Kulasri
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- Last Updated on 31 March, 2025
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Consultation Paper; Dated: 28.03.2025
SEBI believes that Expected Loss (EL) Ratings, when combined with a standardised rating scale or Probability of Default (PD) Rating, can more accurately reflect the recovery prospects of municipal bonds. Further, Urban Local Bodies (ULBs) and Municipalities issue bonds primarily for the creation or development of infrastructure. Therefore, SEBI proposes to extend the use of the EL-based Rating Scale for rating municipal bonds in addition to the standardised rating scale.
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