Sebi proposes 'Credit Risk-o-Meter' to label risk of debt securities
Sebi just announced a plan for a "Credit Risk-o-Meter," a simple, color-coded tool that lets you quickly see how risky a debt security is.
Issuers and online bond platform providers (OBPPs) will need to show this meter in offer documents, abridged prospectuses, private placement memorandums, advertisements, and web/mobile platforms, making it way easier for anyone to check risk before investing.
Six color meter shows ratings, warnings
It uses six colors, from Irish Green, the lowest credit risk, all the way to red, high to very high risk of default, so you can spot risk levels at a glance.
The meter also shows the credit rating, who gave it, and notes if there are multiple ratings, the lowest one counts, but all are listed.
If an instrument isn't secured, expect a bold red warning right underneath.
Sebi seeks feedback until September 3
Sebi is asking for public feedback on this idea until September 3.
The hope is that this tool will help investors make smarter choices with their money.