Rating Agency A credit rating agency is an

Sovereign Rating • A sovereign credit rating is the credit rating of given by

Corporate Rating • Rating agencies offers rating services to the Corporate. Rating helps both

Rating Agency • Government has made it mandatory for all organisations to be independently

Financial Institutions • Credit rating agencies provides ratings on financial institutions including banks; savings

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Rating Agency A credit rating agency is an independent organisation which evaluates the credit worthiness of an company, business, country or of an individual. • • It evaluates the potential borrower’s ability to repay debt. • It takes into consideration the borrowers’ overall credit history, its current assets and liabilities • The lender or an investor can make an assessment of the risk involved in providing debt/loan to the creditor. • A poor credit rating indicates a high risk of defaulting on a loan and thus leads to high interest rates or refusal of a loan by the creditor.

Sovereign Rating • A sovereign credit rating is the credit rating of given by the rating agencies to a country or to a national government. • It considers all the possible risk that a business would have in a particular country. Social unrest, political upheaval, inflation, natural calamities, government interference etc. • The foreign investors heavily depend on these ratings to decide on the investment timing and asset allocation to each country. • Many emerging markets are giving mandates for credit rating to attract foreign investments. – Rating for long term and short term outlook

Corporate Rating • Rating agencies offers rating services to the Corporate. Rating helps both the borrowers and lenders. It helps in demonstrating a corporation’s financial strength to its potential business partners or investors and to improve access to the global credit market. Lendor’s get a detailed opinion of the borrower’s credit profile and risk. • Rating agencies evaluate virtually every kind of organisation, including industrial companies, banks, SMEs, non-banking financial institutions, insurance providers, mutual funds, infrastructure entities, state governments, and urban local bodies. • It rates all the debt instruments

Rating Agency • Government has made it mandatory for all organisations to be independently rated when it raises debt from public. • Large International rating agencies: – Standard & Poor, Moodys, Fitch Ratings. . . • Indian rating agencies: – CRISIL (has a JV with standard & poor), CARE, ICRA

Financial Institutions • Credit rating agencies provides ratings on financial institutions including banks; savings institutions; securities firms; mortgage institutions; finance companies; governmentsponsored enterprises; asset managers; exchange and clearing corporations; and credit unions. They also provide credit ratings on financial institutions as well as the specific debt instruments they issue.