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[email protected]Icra CEO on leave amid Sebi probe
Shares in ICRA, the Indian unit of Moody’s, fell
last Tuesday after the credit rating agency put
ITSûCHIEFûEXECUTIVEûOFlCERûONûLEAVEûBECAUSEû
of a probe into a ratings decision it took last
year.
Icra took the action against Naresh Takkar
after concerns raised anonymously were
forwarded to the company by market
REGULATORûTHEû3ECURITIESûANDû%XCHANGEû"OARDû
of India, the rating agency said in a stock
EXCHANGEûlLINGûLATEûLASTû-ONDAY
)CRAûSAIDûINû-AYûITûHADûAPPOINTEDûEXTERNALû
EXPERTSûTOûPROBEûTHEûANONYMOUSûCOMPLAINTû
concerning the credit rating it assigned to
one of its customers and its units.
Indian media reported that the complaint
WASûABOUTûINTERFERENCEûBYûTHEûRATINGûlRMSû
TOPûEXECUTIVESûINûASSIGNINGûTOPûINVESTMENTû
grade ratings to INFRASTRUCTURE LEASING AND
FINANCIAL SERVICES and its subsidiaries last year.
),&3 ûWHICHûlNANCESûINFRASTRUCTUREû
projects, has defaulted on a series of debts,
its management has been removed and the
Indian government has taken control of its
management and board.
Takkar and an Icra spokeswoman both
declined to comment beyond last Monday’s
announcement.
Apart from Icra, two of India’s biggest and
most prominent agencies – India Ratings
& Research, which is owned by Fitch, and
CARE Ratings – had granted IL&FS AAA
ratings, indicating the highest level of
creditworthiness.
Those ratings were still in place when its
subsidiary IL&FS Transportation Networks
DEFAULTEDûINû*UNEûLASTûYEARû),&3ûWASûlRSTû
downgraded only by a notch in mid-August
and then in just one month all three
agencies slashed the rating to D, deep in
junk debt territory.The string of defaults that followed
triggered fears about contagion in the
lNANCIALûSECTOR ûSPOOKINGûBOTHûEQUITYû
and debt markets and prompting the
government to seize control.
Shares in Icra closed down 2.5% last
Tuesday at Rs3,081.30 (US$44.72) after
touching a low of Rs3,000 earlier in the day.
The stock recovered later in the week, and
was last seen at Rs3,200.
Icra’s decision to put Takkar on leave is
the latest sign of the pressure being put
ONûCREDITûRATINGûlRMSûBYû3EBI ûWHICHûHASû
been increasingly concerned about how
large indebted companies have earned
strong credit ratings, only to have them
downgraded overnight.
Sebi Chairman Ajay Tyagi said on
June 27 that the market regulator had
initiated adjudication proceedings against
some credit rating agencies and was
contemplating starting proceedings against
SOMEûOTHERSû(EûDIDûNOTûNAMEûTHEûlRMSû
concerned.
Sebi has been tightening disclosure
regulations for rating agencies to boost
transparency and accountability and has
made it mandatory for them to closely
monitor whether issuers are meeting their
debt obligations.
It has also curbed cross-holdings between
AGENCIESûTOûREDUCEûCONmICTSûOFûINTEREST
Last month, Sebi directed rating agencies
to formulate a uniform benchmark for
the “probability of default” for each rating
category and asked them to disclose in their
press releases factors to which a rating is
SENSITIVEûANDûEXPLAINûTHEûOPERATINGûANDû
lNANCIALûPERFORMANCEûTHATûCOULDûTRIGGERûAû
rating change.
ABHIRUP ROYPlease contact us if you have information about job moves: [email protected]
years after it tweaked the leverage caps on
REITs. Previously, unrated Singapore-listed
REITs could leverage up to only 35% while
rated trusts could gear up to 60%.
“Personally, I prefer the rating structure
as that encourages REITs to get rated, which
is in line with the central bank’s policy of
pushing Singapore issuers to get ratings,”
said one syndicate banker. “With ratings, the
REITs are more transparent and they fund at
the correct market levels.”
Credit analysts project that a higher cap
will see more REITs seeking more debt-
funded acquisitions as debt is cheaper than
equity.
“We see this as a credit positive for
developers as the larger-sized assets can be
more easily injected into the REIT, allowing
these assets to be more easily monetised,”
said an OCBC credit note.
Morgan Stanley said in a note another
BENElTûOFûHIGHERûGEARINGûWILLûBEûTHATûTHEREû
will be fewer instances of REITs issuing
PERPETUALûSECURITIES ûWHICHûAREûEXCLUDEDûFROMû
gearing limit calculations, as a means to get
around current restrictions.
The MAS consultation ends on August 1.
KIT YIN BOEY, S ANURADHA
GOLDMAN SACHS has
hired Dawei Huang
from Bank of America
Merrill Lynch as
managing director
in its technology,
media and
telecommunications
team.
Huang, who started
last month, is based
in Hong Kong and
reports to Jung Min
and Raghav Maliah,Goldman’s co-heads
of TMT in Asia Pacific
ex-Japan.
Min relocated from
San Francisco earlier
this year to run TMT
in Asia alongside
Maliah, who was
promoted to global
vice chairman of
investment banking
in October. BNP PARIBAS has
appointed Fumito
Okuyama (pictured)
head of global
markets for its
securities business in
Japan.
Okuyama joined in
August last year from
Citigroup and has
served as head of
sales for institutional
investors.
He started his careerat Salomon Brothers
in 1993, staying with
the firm after it was
acquired by Citigroup.
His predecessor
Ayumu Fukazawa has
retired.from scratch with majority control.
The JVs have so far yielded modest results.
In 2018, the seven Sino-foreign JVs recorded
a combined net loss of Rmb48.1m (US$7m).
-ORGANû3TANLEYû(UAXINûWASûTHEûSECONDûWORSTû
performer, reporting a net loss of Rmb99.8m.
HSBC Qianhai Securities was the
worst performer, recording a net loss of
2MBMû4HEû*6ûWASûTHEûlRSTûINûWHICHû
a foreign bank held a majority stake. HSBC
WASûABLEûTOûINVESTûUNDERûAûSPECIlCûTRADEû
agreement between China, Hong Kong and
Macau.
STEVE GARTON, KAREN TIAN