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Tuesday, 3 September 2019

FRA to issue licenses for SME credit rating agencies

REGULATION WATCH- Market regulator paves the way for SME bond sales: SMEs will soon be able to issue short- and medium-term bonds after the Financial Regulatory Authority (FRA) gave the go-ahead to SME credit rating agencies to obtain licenses, the regulator said in a statement (pdf). FRA Chairman Mohamed Omran said the move aims to make it easier for SMEs to finance capital expenditure.

Background: The FRA last year defined the framework and regulations governing short-term debt instruments as part of amendments to the Capital Markets Act’s executive regulations. According to the rules, the issuer must present financial statements going back at least two financial years that have been audited by an FRA-listed auditor. They must also have a credit rating of at least BBB- (or an equivalent) and must appoint a FRA-approved lead manager who should ensure buyers are in good financial standing. Qualified buyers must be solvent and, in the case of individual investors, have at least three years of investing, banking or finance experience.

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