IIRA communicates its opinions on ratings to investors and other stakeholders through symbols. The definitions of ratings are explained in this document.

Rating Symbols

Gradations of creditworthiness or the level of compliance is indicated by rating symbols, with each symbol representing a group in which the credit characteristics or level of compliance are broadly the same. The symbols are specific to the rating in question and are provided with accompanying definitions in this document.

Suspension

IIRA will suspend the rating if due to non cooperation or inadequate level of cooperation of the issuer, the available information about the issue or issuer is not sufficient to uphold the rating opinion. A rating can remain suspended up to a maximum period of 6 months. During this time either the cause of the suspension has to be removed by the issuer or the rating will be withdrawn.

Withdrawal

IIRA may withdraw the rating if;

• New circumstances considered material preclude satisfactory and objective analysis of the impact.
• The Issue is redeemed or matured.
• The obligor fails to renew the contract governing the rating.

Rating Outlooks

IIRA’s rating outlook is an opinion regarding the direction, the issue or issuers’ creditworthiness is likely to take over the medium term. Rating outlooks will fall into the following four categories:
Positive, Negative, Stable and Developing (contingent upon an event). Rating outlook is not a precursor of a rating change.

Watchlist

IIRA uses the Watchlist to indicate if a rating is under review for a probable change in the short-term. An entity may be placed on Watchlist owing to change in circumstances that are expected to result in either an upgrade or downgrade in the credit rating. A credit is removed from the Watchlist when the rating is upgraded, downgraded or confirmed.

Changes in rating

As a result of changes in creditworthiness of the issuers or variations in the compliance level of entities, the credit or compliance ratings undergo changes through out the life of the issue. Such rating changes indicate that the IIRA has observed alteration in creditworthiness or compliance level of the issue or issuer and the previous rating is not fully reflecting the quality (investment or compliance as the case may be) of the issue or issue due to the observed alterations.

Confirmation of a Rating

A confirmation of the rating occurs when a rating is removed from Watchlist.

Reaffirmation of a Rating

Reaffirmations mean that the current ratings will continue to remain in force without an upgrade or a downgrade. Reaffirmations may occur due to a review, release of new information by the issuer, major market event or along with an outlook change. There may be other situations in which ratings are reaffirmed.

Default- Defined

Default is defined as an issuer’s failure to meet its obligation on time. The circumstances leading to default are obligor’s unwillingness to pay or inability to pay.

In case cross default provision is present in the indenture, the obligor is deemed to be in default on all the obligations if he did not meet a single obligation. In case no cross default provision is present the entity is deemed to be in selective default “SD” as a result of failure to meet a single or a few specific obligations while servicing the others.

Default is deemed to have occurred under the following circumstances;

• Failure to pay on the day when interest/ profit and/ or principal payment is due. An exception is taken if there is a grace period and IIRA believes that the payment will be made before the end of the grace period.
• Upon voluntary bankruptcy filing or similar action. An exception will be made if the obligor is expected to continue meeting the obligations on specific issue.
• Upon the completion of a tender or exchange offer, whereby some or all of an issue is either repurchased for an amount of cash or replaced by other securities having a total value that is clearly less than par.
• In the case of preferred stock or deferrable payment securities, upon nonpayment of the dividend or deferral of the interest/ profit payment.

‘p’ Rating

• A ‘p’ rating is assigned to entities, where the management has not requested a rating, and the rating decision is arrived at using publicly available information.
• A ‘p’ rating is shown with a ‘p’ subscript and is publicly disclosed. It is not modified by a plus (+) or a minus (-) sign which indicates relative standing within a rating category. Outlook is not assigned to these ratings.