# SEBI allows expected loss ratings for municipal bonds

2026-08-08T20:50:21+00:00 | Governance | Indian Opinion Desk

Corroboration: 1 independent outlet

SEBI has introduced expected loss (EL) ratings for municipal bonds, allowing credit rating agencies to assign them alongside the existing probability of default scale. The move, detailed in SEBI's Annual Report 2025-26, aims to give investors a clearer view of recovery prospects on infrastructure-linked municipal bond issuances. EL ratings estimate the proportion of principal and interest an investor might lose over the life of the instrument, factoring in both the likelihood and severity of default. SEBI has not replaced the current rating methodology but added EL as an extra assessment layer.

## Coverage

- businesstoday.in <https://www.businesstoday.in/personal-finance/investment/story/municipal-bonds-get-a-new-rating-framework-what-expected-loss-ratings-mean-for-investors-547793-2026-08-08?utm_source=rssfeed>

Tags: credit ratings, expected loss, infrastructure finance, Investor protection, municipal bonds, SEBI
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