Credit ratings are an assessment of a borrower's creditworthiness and can be assigned to any entity seeking to borrow money. They are based on the entity's financial statements and past lending history. Credit rating agencies assign ratings using their own methodology to measure creditworthiness. The top three agencies in the US are Moody's, Standard and Poor's, and Fitch Ratings, while in India they are CRISIL, CIBIL, and Fitch Ratings India. Ratings benefit companies by making borrowing easier and cheaper, and benefit investors by providing safety and recognizing risk.

1. CREDIT
RATING
AGENCIES
FURQAN JAVEED SYED
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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.

4. Instruments for Rating
Government
bonds.
Corporate bonds. Preferred stock.
Collateralized
securities, such as
mortgage-backed
securities.
Collateralized debt
obligation.

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

6. Corporate Credit Rating Scale:

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.

10. Q&A

11. Thank you