2. Credit Rating:
• An assessment of the
creditworthiness of a borrower.
• Can be assigned to any entity that
seeks to borrow money from an
individual, corporation, state or
sovereign.
• Based on the soundness of the
financial statement of borrower and
the lending & borrowing done in the
past.
3. Credit Rating Agencies:
• Credit rating agency, also known as rating agency,
is a company which assigns credit rating.
• Each rating agency has its own rating
methodology to measure the creditworthiness
and uses a specific rating scale to publish its
rating.
5. Top Three Credit Rating Agencies
In the United States:
•Moody’s
•Standard and Poor’s
•Fitch Rating
In India:
•CRISIL
•CIBIL
•Fitch Rating India
Pvt Ltd
7. Uses of
Credit
Rating
Benefit to the
company
•Easier to raise funding
•Reduce cost of borrowing
•Reduced cost of public
issues
•Ratings can build up image
8. Uses of Credit Rating
Benefit to the investors
•Safety of investments
•Recognition of risks and return
•Freedom of investment decisions
•Wider choice of investments
•Dependable creditability of issuers
9. Uses of
Credit Rating
Benefit to the intermediaries
• Stockbrokers can make a less effort in
persuading their clients to select an
investment proposal of making an
investment in highly rated instruments.
