One’s loss, another’s gain: ICRA, Care Ratings rise after SEBI’s action on Brickwork

Share ICRA and Care Ratings  inched higher in early trade on October 7, a day after market regulator Securities and Exchange Board of India (SEBI) issued a winding up order against their peer Brickwork Ratings. The whiplash on Brickwork could translate to higher business for ICRA and CARE Ratings, believe analysts.

At 10:00 am, ICRA was up 2 percent, quoting Rs 4081 on the National Stock Exchange, while CARE Ratings was up 1.37 percent, quoting Rs 519.20.

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On October 6, SEBI cited failure on the part of Brickwork Ratings to "exercise proper skill, care and diligence, while discharging its duties as a credit rating agency". Delay in recognition of default of NCDs of Bhushan Steel Ltd. even after disclosure of default by the debenture trustee is one among the many lapses cited by SEBI.

"Credit Ratings are relied upon by investors, including institutional investors like Provident Funds and Mutual Funds which handle public funds, not just while assessing investment opportunities, but also in making investment decisions," SEBI said.

Also Read: Sebi orders Brickwork Ratings to wind up, in first such action against a credit rating agency

Reports suggest Brickwork Ratings has single digital market share, so business gain for others will be marginal. Meanwhile, CRISIL which already has a 60 percent market share, pared gains after opening higher and was trading flat at Rs 3,213 apiece, at 10 AM.

Given the important public function played by CRAs, it becomes essential to ensure that only entities conforming to best practices in governance, SEBI observed in its order.