Fitch welcomes Securities and Exchange Board of India's draft regulations for REITs

05 February 2008

Mumbai/Singapore: Credit ratings agency Fitch Ratings says it is in favour of SEBI's draft regulations for the 'real estate investment trusts' (REITs) as proposed by the Securities and Exchange Board of India (SEBI).

SEBI's draft regulations propose that each Indian REIT be required to have a "rating from a credit rating agency" at launch.

''Investors in REITs are equity holders of the entity while the credit rating is targeted at debt investors,'' Fitch said in a statement. It however, qualified this saying, a credit rating assesses the fund's ability to service and repay its debt, which would assist investors in ranking the ability of a REIT to do so, but does not comment on the success or failure of a REIT beyond this.

''While ratings published by ratings agencies such as Fitch Ratings are used by the public and investor community in evaluating credit quality, it is important that users understand the limitations of such ratings,'' Fitch said in a statement.

It cautioned investors to note that the agency's credit and research are not recommendations to buy, sell, or hold any security. ''Ratings do not comment on the adequacy of market price, the suitability of any security for a particular investor, or the tax-exempt nature or taxability of any payments of any security.''

It clarified that the ratings are based on information obtained from issuers, other obligors, underwriters, their experts, and other sources the agency believes to be reliable, and therefore, does not audit or verify the truth or accuracy of such information. Ratings may be changed or withdrawn as a result of changes in, or the unavailability of, information or for other reasons.