MFs seek more disclosures from rating agencies to improve predictability

Raters need to share weights being assigned to risk-factors and rating action in different scenarios, say mutual funds

The Securities and Exchange Board of India’s (Sebi) guidelines for rating agencies on disclosures has left some room to be desired. 

According to mutual fund (MF) players, this will help the fund manager take a more informed investment call if it knows the scenarios in which the ratings could change. Further, a detailed disclosure on the weightage being accorded to each rating factor within different sectors will help improve predictability of rating changes, the MF players said.  

On Tuesday, Sebi issued guidelines that require rating agencies to make disclosures on promoter support, linkages with subsidiaries, and liquidity position of entities