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PRESENTED BY-
AKSHAYA CHENDVANKAR - 12
MAHIMA GOTEKAR - 21
OMKAR LONDHE - 41
What is Credit Rating?
A Credit Rating is an opinion on the
• Relative degree of risk associated with
• Timely payment of interest and principle
• on a Debt Instrument
• credit worthiness
• Financial history and current Assets and Liabilities
• Credit Rating Agencies
• pay back a loan
Types of Credit Rating
1) Sovereign Credit Rating
2) Short – Term
3) Corporate Credit Rating
OBJECTIVE
The main objective is to provide superior and cost info to investors
for taking a decision regarding risk return trade off,but its also help
to market participants in the following ways
 Improve a healthy discipline on borrowers.
 Lends greater credence to financial and other representations
 Facilitates formulation of public guidelines on institutional
investments.
 Help merchant bankers , brokers , regulatory authorities ,etc., in
discharging their functions related to debt issues
 Encourage greater information disclosure , better accounting
standards and improve the financial information(help to investor
protection).
 May reduce interest costs for highly rated companies.
 Acts as a marketing tools.
Benefits To Investor
 Minimization of Risks
 Constant Review
 Freedom of Investment Decision
 Save Time , Effort ,Money
 Wider Choice of Investment
 Exploits Market Conditions
 Risk Recognition
Benefits To Company
 Cheaper Credit
 Enhance corporate image
 Facilitates growth & expanssion
 Beneficial to new, unknown and Small
Companies
 Wide access Investors
Instruments for Credit Rating
 Preference shares
issued by a
company

 Bonds, Debentures
issued by
Corporate,
Government etc.
Cont…

 Borrowers who
have borrowed
money

 Individuals
Cont…
 Commercial Paper issued by
manufacturing companies, finance
companies, banks, and financial
institutions for raising short term loans
Cont…
 Mutual Fund Debt
Scheme

 Asset backed
securities
Cont…
 Bank Certificate of Deposit
Cont…
 Initial Public Offers (IPO)
Credit Rating Process

1. Receipt of Request 4. Communication of 7. Dissemination to

from the company decision to the issuer the Public

2. Assignment to 5. Presentation of 8. Continuous

Analytical Team Findings Monitoring

3. Collecting
6. Site visits and
Information and
interaction with
conducting
Management
Preliminary Analysis
SYMBOL
Credit rating agencies in INDIA
 CRISIL
 CIBIL
 CARE
 ICRA
 ONICRA
 SMERA
 HIGH MARKET INFORMATION
SERVICES
 BRICKWORK RATING INDIA PVT.LTD
 MOODY’S & STANDARD &
POOR(S&P)
 BOND rating agencies
 Current research
 S&P rating vary to AAA TO C
 Moody’s rating go from Aaa to D
 Bond rate is BBB is show good
investment option
 low grade debt
 CONCLUSION
The rating agencies in India would have already
abilities to undertake relatively fair and
systematic rating exercises for issuance of
corporate bonds, both domestically and
internationally. It is therefore commended
that harmonization and adjustment between
“local scale” and “international scale” ratings
are to be further promoted. The affiliated
agencies like CRISIL and ICRA could utilize
their own ratings system that could be easily
comparable to that of international ratings
taken by S&P and Moody's.