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CREDIT RATINGAGENCIES
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HISTORY
First credit ratingagency.
India was perhaps the
first amongst
developing countries to
set up a credit ratingagency in 1988.
Risks.
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WHAT IS CREDIT
RATING?
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DEFINITON
According toS&P According toMOODYS
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IMPORTANCE OF CREDIT
RATING To compare the loan on the basis
of quality of credit and loan.
Credit rating agencies also assistto portfolio monitoring.
Credit Rating Credit quality of
transparency.
Credit rating of money market
securities.
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BENEFITS OF CREDIT
RATING
TOINVESTORS TO
COMPANY
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FUNCTIONS OF CRA
PROVIDES EXAMINES
OFFERSERVICES
GRADATION
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CREDIT RATING PROCESS
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CREDIT RATING AGENCIES IN
INDIA
CRISIL ICRA
CARE DCR
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CRISIL
The first credit agency setup on January 1, 1988,jointly started by ICICI and UTIwith an equity capital
of Rs. 4 crores, as public Ltd company.
CRISIL is India's leading rating agency, and is the
fourth largest in the world.
With over a 60% share of the Indian Ratings market,
CRISIL Ratings is the agencyof choice for issuers and
investors. CRISIL inspires trust and confidence the world over.
It redefines industry standards constantly, and sets
new benchmarks year after year.
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CRISIL(Core Business)
Rating
Research
Capital markets
Infrastructure Advisory
CRISIL risk solutions
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ICRA
ICRA Limited (formerly Investment Informationand Credit Rating Agency of India Limited) wasset up in 1991 by leading financial/investmentinstitutions, commercial banks.
ICRA was set up by IFCI on 16th January 1991.
It is a public limited company with an authorizedshare capital of Rs.10crores, Rs. 5 crores is paid
up. ICRA is a Public Limited Company, with its shares
listed on the Bombay Stock Exchange and theNational Stock Exchange.
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RANGE OF SERVICES
Rating Services
Grading Services
Consulting Services
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CARE
CARE(credit analysis and researchlimited).
CARE Ratings commenced operations in
April 1993 and over nearly two decades,
it has established itself as the second-
largest credit rating agency in India. With
the rating volume of debt of around
Rs.33,062 bn (as on June 30, 2011).
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RATING METHODOLOGY
Business analysis
Financial analysis
Management evaluation
Fundamental analysis
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RATING SYMBOLS
High investment grades AAA & AA - Highest safety
A - Adequate safety
BBB - moderate safety
Speculative grades
BB - inadequate safety
B - high risk
C - substantial risk
D - default
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DCR
DCR(Duff and Phelps credit rating Indialimited).
It was founded in 1932 to provide high
quality investment research servicesfocused on the utility industry. Over the
decades, it evolved into a diversified
financial services firm that provides financialadvisory, investment banking, credit rating
and investment management services.
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SEBI ISSUED GUIDELINES TO
CRAs CRAs should maintain records of the rating
committee.
Information about the historical default rates of
their rating categories. CRAs should ensure that its analysts do not
participate in any kind of marketing and businessdevelopment.
CRAs while rating structured finance products,are barred from providing consultancy oradvisory services regarding the design of thestructured finance instrument.
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CONCLUSION
Credit rating is an input for decision making. A credit rating is not a recommendation to buy,
hold or sell a security. A rating is one of the inputsthat is used by investors to make an investment
decision. Investors expect higher returns for lower rated
instruments.
Rating agencies do not comment on the return
being offered on a security. Also, investors useseveral other factors like level of portfoliodiversification and liquidity levels of the securityetc. in making investment decisions.
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PRESENTED BY:-
MOHIT SHAH 45
VAIBHAV MEHTA 38
VISHAL JAIN 24
POOJA GOKANI 12
ARZOO SHAH 41
SEJAL ZAVERI 58
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Thank you
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