NAME: BADANA, Rhea Lou A.

(TTh 1:30 – 3:00 PM)

Midterm: Credit Rating for Businesses and Government

The video was about credit ratings and how important they are to countries. It defined credit
ratings as assessments of a borrower's creditworthiness or ability to repay debt.

The video covered concepts such as how credit ratings are determined, who issues credit ratings,
and how they can affect a country's ability to borrow money and the cost of borrowing that
money. Credit ratings are determined by credit rating agencies, such as Standard & Poor's,
Moody's, and Fitch Ratings. To assess creditworthiness, these agencies consider the borrower's
track record of repaying debt and their debt-to-income ratio, as well as their access to capital
markets and the quality of their underlying assets. After evaluating these factors, credit rating
agencies assign a rating to the borrower, usually on a letter scale, such as AAA, AA, A, BBB, BB, B,
CCC, CC, C, and D, with AAA being the highest rating and D being the lowest. Credit ratings can
significantly affect a country's ability to borrow money because lenders, such as banks, investors,
and other financial institutions, rely on credit ratings to assess a borrower's creditworthiness and
determine the terms of their lending. A high credit rating indicates to lenders that a country is
unlikely to default on its debt obligations, making it easier for the country to borrow money, as
lenders are more willing to lend to borrowers with high credit ratings and may offer lower
interest rates or better terms. On the other hand, if a country has a low credit rating, lenders may
view the country as a higher-risk borrower which makes borrowing more difficult and expensive.

My takeaway from the video is that credit ratings can have a significant impact on a country's
ability to access financing as well as the cost of that financing. Countries with higher credit ratings
are often able to borrow money at lower interest rates, whereas countries with lower credit
ratings may face higher borrowing costs. This can have an impact on a country's ability to fund
important projects such as infrastructure or social programs and its overall economic growth. In
the future, I may use this information by paying close attention to country credit ratings when
making investment decisions.