New Delhi, October 7, 2026 (Yes Punjab News)
Capital markets regulator SEBI on Wednesday made the colour-coded “Credit Risk-o-Meter” mandatory for debt securities, aiming to help investors better understand the credit risk associated with bonds and other debt market investments.
Under the new framework, issuers and market intermediaries will have to prominently display the risk meter across investor-facing documents and platforms, including offer documents, abridged prospectuses, private placement memorandums, advertisements, and the websites and mobile applications of Online Bond Platform Providers (OBPPs).
The requirement will cover listed and proposed-to-be-listed debt instruments, including non-convertible securities, commercial papers, securitised debt instruments, security receipts and market-linked debentures. It will apply to securities issued through both public offerings and private placements.
SEBI has mapped credit ratings to six risk categories, ranging from “lowest credit risk” for AAA-rated instruments to “high to very high risk of default” for securities rated B and below.
Short-term debt instruments will have a separate version of the meter covering ratings from A1+ to A4/D.
Where a security has ratings from more than one credit rating agency, the Credit Risk-o-Meter will reflect the lowest available rating. Issuers will also have to prominently disclose the credit rating and the name of the rating agency alongside the meter.
To highlight additional risks, unsecured debt instruments must be specifically identified in bold red text.
SEBI has also introduced a separate grey “INC” category for cases where a credit rating agency classifies an issuer as “Issuer Not Cooperating”. The category is intended to alert investors to concerns related to disclosures and cooperation with the rating agency.
The regulator has prescribed standard disclaimers clarifying that the Credit Risk-o-Meter reflects only the credit risk of a security and should not be considered investment advice or a recommendation to buy or sell.
Investors will also be cautioned that debt securities carry other risks, including market and liquidity risks. For unsecured perpetual instruments such as Additional Tier-1 (AT1) bonds, disclosures must additionally highlight structural risks and the possibility of a complete loss of invested capital.
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