DSPML's Rs 19,500-cr papers under ratings watch

Rating agency Crisil has put debentures worth Rs 10,500 crore of DSP Merrill Lynch Capital under watch. The debentures were guaranteed by DSP Merrill Lynch & Co.

Those under “rating watch with developing implications” are three non-convertible debentures (NCDs) worth Rs 2,500 crore each and six equity-linked debentures (ELDs) of Rs 500 crore each.

IL&FS is acting as debenture trustee of these papers.

Yesterday, short-term debentures of Rs 9,000 crore were put under ratings watch by Crisil.

The NCDs have AA+ ratings whereas the ELDs have AA+r ratings, where the suffix ‘r’ implies that the payment on the rated item has significant risks other than credit risks.

 

The terms of these instruments already specify that the payments to investors will not be fixed. That means the payments could change depending on one or more external variables such as commodity prices, equity indices or foreign exchange rate.

As a result, there could be a rise or fall in the payments — including loss of principal because of adverse movement in value of the external variables.