Sebi questions rating agencies on valuing debt backed by promoter shares

The regulator wants to know the basis for grading debt schemes with such exposures

The rating agencies have once again come under the scanner of the Securities and Exchange Board of India (Sebi). This time the market regulator wants to know on what basis the rating agencies are rating mutual fund's (MF) debt schemes with exposure to papers that are backed by promoter shares, also known as loan against shares (LAS).

According to people in the know, the regulator also wants to understand how rating agencies are re-valuing LAS instruments when there are sharp correction in pledged equity shares, hitting the share cover of these structures.

Sources say that the LAS exposures have come