Credit rating process

Credit rating
The rating process begins with the receipt of formal request made by a company
desirous of having its issue obligations rated by credit agency.
A credit rating agency constantly monitors all ratings with reference to new political,
economic and financial developments and industry trends.

Credit rating process

The process undergone through various stages

 Rating Application
Issuer requests and signs rating application

 Analytical Team Assigned

Issuer is assigned lead analyst

 Collection of information
Lead analyst assembles relevant information from available sources

 Rating Committee
Rating committee convenes to consider credit rating recommendations

 Analysis
Analysist review and evaluate relevant information and apply appropriate credit
rating methodology

 Interaction with user

Analytical team and issuer, or agent of the Issuer conduct discussions

 Rating Notification
Issuer is notified of the rating committee decision

 Rating Dissemination
Credit ratings are communicated to the general public for public ratings

 Surveillance
Monitors the credit rating on an ongoing basis, if appropriate
Factors affecting the credit rating process
 Business risk Analysis
 Financial Analysis
 Management evaluation
 Geographical analysis
 Regulatory and competitive environment
 Fundamental analysis

Credit rating instruments

Credit rating is the process of assigning standard scores which summarize the
probability of the issuer being able to meet its repayment obligations for a particular debt
instruments in timely manner. Credit rating is integral to debt markets as it helps market
participants to arrive at quick estimated and opinions about various instruments

Why credit rating is important

Number of reasons associated with credit rating

 It increase investor acceptance

 Current economic environment
 Current capital market environment
 Lowest interest cost

Benefits of credit rating

 Improves access to funding
 Raises corporate profile
 Demonstrates transparency
 Provides investors with independent opinion
 Promotes market stability
 Provides global comparability

Types of credit rating

Following are the types of credit rating
 Sovereign ratings
Assess the country credit risk and used as point of reference for country
borrowing from international borrower
 Entity ratings
Risk ratings of corporate sector
 Instrument rating
Ratings of the bond issued by different corporations
Long term issue rating

Short term issue rating

PAKISTAN CREDIT RATING