Credit Rating -Defined

Is an Independent third party assessment of a financial security of an issuer that gives the idea to the investor about capacity and inclination of issuer to full fill the obligations of the issue based on Qualitative and Quantitative appraisal of Issuer. For Debt Issue This would assist in gauging the Default Risk

 In India Equity issues to get rated now Based on the Fundamentals of a Company CRISIL (Credit Rating Information Services of India Ltd.) , ICRA (Investment Information and Credit Rating Agency of India Ltd.), CARE (Credit Analysis and Research Ltd.) Domestic Rating agencies in India

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Duff and Phelps and Fitch are Foreign Rating agencies operate in India

 Standard & Poors (S&P) and Moodys are the largest US based rating agencies SEBI regulates the Rating Agencies in India under the SEBI (Credit Rating Agencies) Regulations 1999. A minimum of Rs. 100 crores as Networth is required to operate as a rating agency in India A Rating agency CANNOT Rate the issue being made by the Parent company

 Rating is One time as well as Continuing Process. Generally Annual Rating (review) may take Place

CRISILs Scale for Debt Instruments

Symbol (Rating category). Description (with regard to the likelihood of meeting the debt obligations on time) AAA -Highest Safety AA High Safety A Adequate Safety BBB Moderate Safety BB Inadequate Safety B High Risk C Substantial Risk D Default