This document provides an overview of credit ratings and rating agencies. It discusses that credit ratings are issued by rating agencies and represent their opinion on the likelihood that a debt issuer will repay their obligations. The major international rating agencies are Standard & Poor's, Moody's, and Fitch which provide ratings for bonds, commercial paper, and other debt instruments issued by public and private entities. In India, the major national rating agencies are CRISIL, ICRA, CARE, SMERA, and ONICRA which provide similar ratings for Indian debt issuers. The document outlines the various types of ratings provided and factors analyzed in the ratings process.

1. Aravind Mohan
(FM-1068)
1

2. Credit Rating refers to an expert opinion by a rating
agency on the relative willingness & obligation of a issuer
of debt instrument to meet the debt servicing obligation as
and when they airse. These are judgements on a firms
financial and business aspects. These ratings are of
symbols of alphabets or alpha numericals.
2

3.  Ratings are chalked out exclusively for the purpose of
grading debentures, bonds, Govt. bonds, municipality
bonds, public deposits, commercial papers etc.
 Rating is a current assessment of the credit worthiness of
an issuer of securities with respect to specific obligations.
 Credit Rating is an opinion of credit rating agencies
indicating relative safety of timely payment of interest and
principal debenture, preference share, fixed deposit or
short term instrument by a company.
 Rating is not based on audit.
3

4.  Equity Rating
 Bond Rating
 Commercial Paper Rating
 Individual Rating
 Asset backed securities Rating
 Country Rating
 Other Ratings
4

5. Major Elements of Analysis-
• Business Analysis
• Financial Analysis
• Management Evaluation
• Environmental Analysis
• Fundamental Analysis
5

6.  International (BIG
THREE)
 Standard & Poor’s
Financial Services
 Moody’s Investor Service
 Fitch Ratings Inc
 National
 CRISIL
 ICRA
 CARE
 FITCH
 SMERA
 ONICRA
6

7.  Founded in 1860 by Henry Varnum Poor
 Is a division of McGraw Hill Financial
 Headquartered at New York, US.
 Issues credit ratings for the debt of public and private
companies & other public borrowers such as governments
and governmental entities.
7

8.  Founded in 1909 by John Moody
 Headquartered at New York, US.
 Services offfered-
 Moody’s Analytics
 Moody’s Pricing & Valutation Tools
 Moody’s Advisory Services
 Moody’s Economy.com
 Moody’s Training and Certification
8

9.  Founded in 1913 by John Knowels Fitch
 Headquartered at New York, US.
 Provides Ratings on-
 Corporate Finance
 Financial Institutions
 Public Finance
 Research on Emerging Markets
9

10.  Largest credit rating agency in India
 Established in 1987
 Initially promoted by ICICI Ltd and UTI as a public
limited company.
 S & P holds majority stake in CRISIL.
 Services-
 Credit Rating Services
 Research Information and Evaluation Services
 Advisory Services
 Training Services
10

11.  Established in 1993
 Promoted by IDBI, Canara Bank and SBI.
 2 divisions- CARE Ratings and CARE Research
 Services offered-
 Credit Rating
 Information and Advisory Services
 Equity Research
 Other Services like CARE Loan Rating etc.
11

12.  Established in 1991
 Promoted by IFCI and other financial institutions
 Services Offered-
 Rating Services
 Advisroy Services and
 Investment Information Services.
12

13.  Subsidiary of FITCH Group
 Entered India by acquiring Duff & Phelps Credit Rating
India Pvt Ltd.
 Recognized by SEBI, RBI, IRDA and NHB
 Mainly provides Rating Services
13

14.  Joint Initiative between Small Industries Development
Bank of India (SIDBI) and Dun & Bradstreet Information
Services India Pvt Ltd (D&B) and several leading banks.
 Established in 2005
 1st rating agency that focuses on SMEs.
 Rating Services- MSME Ratings, IPO grading, Project
ratings, Micro Finance institutions ratings
14

15.  1st individual rating agency in India
 Established in 1993 and promoted by ONIDA Group
 Services offered-
 Rating Services
 Grading Services
 Credit Information
15

16. 16

17. 17

18. 18

19.  “Financial Institutions and Markets: Structure, Growth
and Innovations”- by L.M.Bhole
 “Financial Services”- by Dr.A.J George and Anish
Thomas, Prakash Publications
 standardandpoors.com
 moodys.com
 fitch.com
19

20. 20