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Credit rating affects the confidence level of the investors to countries or companies. The
credit ratings are determined by companies that are recognized globally that objectively assigns
or evaluates countries and companies based on the riskiness of doing business with them. The
riskiness is primarily driven by their ability to manage their liquidity and solvency in the long run.
The higher the grade the lower the default risk associated to the country or company. These
three major rating companies are: Standard & Poor’s Corporation (S&P); Moody’s Investors
Service; and Fitch Ratings.
Although, the credit ratings provided by these companies are just recommendatory
opinion and will serve as reference only and is not an absolutely provide default probability to
the companies.
Fitch Ratings. The third credit rating agency is Fitch Ratings. It was founded in 1914
in New York, USA. The company was owned by Hearst. Hearst is a global
information and services company. Fitch provides credit opinions based on the credit
expectations based on the certain quantitative and qualitative factors that drive a
company, they assess based on the credit analysis and intensive research. They
conduct their assessment over more than 8,000 entities around the globe with 25
different currencies. Fitch same with the other rating agencies publishes its opinion
based on a certain scale of ratings to represents their opinion from AAA to D.
There are other credit rating agencies other than the three major like DBRS and
CARE Ratings. Unlike S&P, Moody’s and Fitch, these credit rating agencies were not
located in the United States. DBRS was established in 1976 in Toronto, Canada. The
company was considered as the fourth largest ratings agency. The company observe
almost 50,000 securities worldwide. DBRS also has offices in New York, Chicago,
London, Frankfurt and Madrid in Spain. The rating follows from AAA to C as the
least. CARE Ratings started its operation in 1993 based in India. The company is
based in Mumbai with partners in Brazil, Portugal, Malaysia and South Africa. Other
than Mumbai they also have about 10 regional officers that aims to provide
information to investors to serve as guide as they enter into new investment. They
also use AAA as the best instrument to D as the least.