Credit ratings are evaluations of a borrower's ability to repay debt. They are issued by credit rating agencies and help investors assess risk. The key objectives of credit ratings are to build market confidence, impose financial discipline, guide investors, promote growth, and encourage transparency.
The credit rating process involves several steps - a rating agreement, analytical review, management meetings, a rating committee decision, and public dissemination. Major credit rating agencies in India include CRISIL, ICRA, CARE, and Fitch. They offer services like rating debt instruments and companies, as well as research reports. Rating symbols communicate the level of risk and range from highest quality ratings to default.
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Credit ratings are evaluations of a borrower's ability to repay debt. They are issued by credit rating agencies and help investors assess risk. The key objectives of credit ratings are to build market confidence, impose financial discipline, guide investors, promote growth, and encourage transparency.
The credit rating process involves several steps - a rating agreement, analytical review, management meetings, a rating committee decision, and public dissemination. Major credit rating agencies in India include CRISIL, ICRA, CARE, and Fitch. They offer services like rating debt instruments and companies, as well as research reports. Rating symbols communicate the level of risk and range from highest quality ratings to default.
Credit ratings are evaluations of a borrower's ability to repay debt. They are issued by credit rating agencies and help investors assess risk. The key objectives of credit ratings are to build market confidence, impose financial discipline, guide investors, promote growth, and encourage transparency.
The credit rating process involves several steps - a rating agreement, analytical review, management meetings, a rating committee decision, and public dissemination. Major credit rating agencies in India include CRISIL, ICRA, CARE, and Fitch. They offer services like rating debt instruments and companies, as well as research reports. Rating symbols communicate the level of risk and range from highest quality ratings to default.
Copyright:
Attribution Non-Commercial (BY-NC)
Available Formats
Download as PPTX, PDF, TXT or read online from Scribd
Credit ratings are evaluations of a borrower's ability to repay debt. They are issued by credit rating agencies and help investors assess risk. The key objectives of credit ratings are to build market confidence, impose financial discipline, guide investors, promote growth, and encourage transparency.
The credit rating process involves several steps - a rating agreement, analytical review, management meetings, a rating committee decision, and public dissemination. Major credit rating agencies in India include CRISIL, ICRA, CARE, and Fitch. They offer services like rating debt instruments and companies, as well as research reports. Rating symbols communicate the level of risk and range from highest quality ratings to default.
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Credit Rating
Credit Rating is the symbolic indicator of the current opinion of the rating agency regarding the relative ability of the issuer of the financial(debt ) instrument to meet the debt service obligations as and when they arise . A credit rating estimates the credit worthiness of an individual, corporation, or even a country. It is an evaluation made by credit bureaus of a borrowers overall credit history. A credit rating is also known as an evaluation of a potential borrower's ability to repay debt
Objective of Credit Rating
To rate the debt instrument in order to build market confidence To impose financial discipline on the borrowers To guide the investor regarding his commitment towards a particular debt instrument for his better return To promote growth of new issue market To encourage transparency of information and better accounting
standards
Credit Rating Process
1. Rating Agreement 2. Assignment of analytical team 3. Meeting with management 4. Rating Committee 5. Communication to the issuer 6. Dissemination to the public 7. Rating review for possible change New data of company Rating Change Credit rating watch
Rating methodology
Credit Rating Agencies in India
Credit Rating Information Services of India Limited (CRISIL) Investment Information and Credit Rating Agency of India (IICRA) Credit Analysis & Research Limited (CARE) FITCH Ratings India Ltd Duff & Phelps Credit Rating India Private Ltd. (DCR India) ONICRA Onida Individual Credit Rating Agency of India Ltd. Small and Medium Enterprises Rating Agency ( SMERA)
Credit Rating and Information services of India Limited (CRISIL)
CRISIL was jointly promoted by ICICI and UTI Its shareholders are LIC,SBI,HDFC,GIC etc In 1995, it entered into a strategic alliance with standard and Poor to extend its credit rating services to borrowers form overseas market The services offered are broadly classified a rating services, information services , consultancy and Training services
Investment information and credit rating agency of India limited (ICRA)
ICRA has been provided by IFCI and 21 other shareholders comprising foreign and nationalized banks and Indian insurance companies Established in 1991, ICRA is the second Rating agency in India . Services offered by ICRA are analytical services, advisory services and investment services 1.The analytical services comprise rating of debt instruments and credit assessment 2.The advisory services include strategic counseling such as restructuring exercise and sector specific services such as telecom, ports , power sector
3.The information desk provides research reports on specific industry and corporate sector Credit Analysis and Research (CARE) CARE was established in 1992 by IDBI jointly with Canara Bank, UTI, Private sector banks and insurance companies The services offered by CARE include credit rating of Debt instruments, credit assessment of companies , advisory services
Ratings Definitions of Long Term Govt Debt Highest quality- AAA Very Good Quality- AA Good Quality-A Medium Quality-BBB Lower Medium Quality-BB Poor Quality-B Speculative Quality-C Default-D
CRISIL Rating Symbols
Debentures High Investment Grade AAA- Highest Security AA- High Safety Investment Grade A Adequate Safety BBB-Moderate Safety Speculative Grades BB- Inadequate Safety B-High Risk C- Substantial Risk D- Default
CRISIL Rating Symbols
Fixed Deposits FAAA- Highest Security FAA- High Safety FA Adequate Safety FB-Inadequate Safety BB- Inadequate Safety FC-High Risk FD- Default
CRISIL Rating Symbols
Short Term Instruments P-1 Highest Security P-2 High Safety P-3 Adequate Safety P-4 Inadequate Safety P-5 Default Bond Funds AAAf- Very strong Protection AAF- strong Protection AF- Adequate Protection BBBf- Moderate Protection BBf- Inadquate Protection Cf- Default
CRISIL Rating Symbols
Bank Loan Ratings BLR1- Strong BLR2-Good BLR3-Satisfactory BLR 4-Moderate BLR5- Loss Collective Investment Schemes Grade I- High Certainty Grade II-Adequate Certainty Grade III- Moderate Certainty Grade IV- Inadequate Certainty Grade V- High Certainty
