Credit rating

 It 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.

 Specific to debt/ financial instrument

 Don’t recommend to buy, hold or sell

Credit rating
• Credit Rating Information Services of India CRISIL
1988

• Information and Credit Rating Services ICRA

1990

• Credit Analysis and Research ltd CARE

1993

1995 • Phelps Credit Rating India Ltd . Known as FITCH

2005 • Small and Medium Enterprise Rating Agency (SMERA)

Rating Process
New Issues
1. Rating Agreement and Assignment of Analytical Team

2. Meeting with management

 Collects information
- Annual reports for 5 yrs and interim reports for 3 yrs
- 2 copies of latest prospectus
- Financial statements of principal/subsidiary company
for 3yrs
Rating Process

- 2 copies of projected financial statements for next 3 yrs

- Copies of existing loan agreements
- Board’s resolution regarding the issuance of commercial
paper
- List of banks showing lines of credit and contact officers
- The name of CP dealer, proceeds and usage
- Information on principal officers and board members