Grab CREDIT RATING AGENCY OF BANGLADESH LTD. WWW.CRAB.COM.BD WWW.CRABRATING.COMCrepit RATING AGENCY OF BANGLADESH LTD. ‘Credit Rating Agency of Bangladesh Ltd (CRAB) is committed to providing the financial markets with reliable, timely and prospective credit ‘opinions. Built on a foundation of standardised approach in credit rating incorporating international hest practices and local dynamics, CRAB is recognized around the country and across all industrial sectors as @ ‘market leader in credit ratings and research. ‘Credit Rating Agency of Bangladesh Ltd, (CRAB) was established in 2003 at the initiative of some leading personalities in private sector and institutions of the country with the commitment to cantribute to the development of the capital market by providing quality ratings and ‘comprehensive research services, CRAB was incorporated as 2 public limited company in 2003 and was granted licence by the Bangladesh Securities & Exchange Commission (BSEC) in 2004 Within short span of time, CRAB has established its reputation as a reliable source of independent opinion on risks based on systematic and standardized ‘analysis dane by professionals. CRAB is a member of the Association of Credit Rating Agencies in Asia (ACRAA). ACRAA, established in 2001, is a federation of domestic rating ‘agencies of the Asian Continent, formed with support and cooperation of the Asian Development Bank (ADB). ACRAA works to develop cooperation among credit rating agencies in Asia and promote best practices and standards. As a member, CRAB has been member of the best practices committee of ACRA and actively participates in all its activities (web: wwwacraa.com), CRAB Is also a founder member of ‘Association of Credit Rating Agencies in Bangladesh (ACRAB). CN Sales ACROSS SECTORS INDUSTRY WISE NUMBER OF RATINGS" er)BOARD OF DIRECTORS CHAIRMAN M. Syeduzzaman, Former Finance Minister Gort of Bangladesh Developmen Finance Company Lid. Former Adviser tothe Coeter Former Secretary of France, Gort. of Bangladesh Gow of Bangladesh Mir Mustafizur Rahman ‘AKM Ratiqut Islam, FCA. Former Secretary of Finaet, Former Managing Director Govt of Bangladesh Pragat! Insurance Lid. Tapan Chowdhury ‘Sohail Humayun Md. Fayekuzzaman Selim RF Hussain “Managing Director, Managing Director, ‘Managing Directo, nvsimert (CEO & Managing Director ‘Square Pharmaceuticals Lid Unicorn Baus Ld Corporation of Bangladesh IDUC Fince Lid Representing Astras Lid Es Raihan Rahman Hamidul Hug Former Regional Head Managing Director (of Brands British American (Cred Rating Agency of Tobacco Asia Pai Bangladesh LidRATING COMMITTEE Dr, Mohammad Haroonur Rashid Former Secretary & Member Planning Commission and Former Chairman of ‘Securities & Exchange Commission of Bangladesh i Dr, Salehuddin Ahmed Former Governor of ‘Bangladesh Bank Actuary, Former Deputy Governor Bangladesh Bank & Chairman Sadharan Bima Corporation ‘Asi ll Former Copier & hutor General of Bangladesh Mohammad Sohrab Uddin Ph.D, AIA RATING PROCESS a ef ox xB mca ma Aste tam Famer Ader Coeber Gaof \ ‘Bangladesh, Former Chairman of Serer ErhongeConmiin fBongadsh ca ag | Farag Abad sig Food PorveSectry & Chron VSM Series Exchange Coon + of Bangladesh Step 2 ‘Analyst Assignment M.Shamsul Alam Info Requirement Chairman Visits & Meetings -Tibon Bia Corporation Leal Wey pay ‘ M.Azizul Hug ry Noted pert lane Banting & i =e Bank Bangles Lid 20 Draft Report Client Feedback Internal Review: Rating Committee Hamid Hug ¥ Managing Director (Chet Rating Agency of angle Lid “The credit rating process has tits apexahigh powered Rating Committe composed of step 4 personalities with Impeccable integrity, judgement and standing, The Committe Is Rating Assignment “entrusted with the responsibilty for finalisation of the Rating Report and fixation of the et (aes ‘ : nnual Surveillance fating Award to client entities and/or instruments. ees *The composition of Rating Committee may change from time to time. aWHAT WE DO Advisory Information Rating Grading Services Services GRATING SERVICES Entity / Issuer Rating: Instruments Rating: Banks and Financial Institutions Debt Instruments (Bonds, Debentures, Pref. Shares etc.) Insurance Companies (General & Life) Structured Finance / Securitizations Corporate (Public & Private) Project Loans / Syndicated Loans Client Rating for Banks / Financial institutions LUnes of Credit under Basel I State Owned Entities. Equity Instruments (IPO, Rights) Micro Finance Institutions Mutual Funds ‘Small & Medium Enterprises (SME) ‘Other Instruments Other Organizations / Entities @ GRADING SERVICE ADVISORY SERVICE INFORMATION SERVICE REQUIREMENTS FOR RATING IN BANGLADESH Debt instruments Bond, debenture, commercial paper, structured finance (asset/mortgage backed securities) and Preference shares Rating Methodology Corporate Corporate Cir [for all rating methodologies visit www.crab.com-bd] Public issue of shares at a premium Rights issue by listed companies at premium Scheduled Banks on an annual basis Financial Institutions General Insurance companies Life insurance Companies Credit Exposures of Banks/Fls (Corporate & SME) tC Ceudesd ued ad Pray {(detalls n website)WHY CRAB THE ULTIMATE CHOICE FOR CREDIT RATING IN BANGLADESH CRAB is a leading analytical company of Bangladesh providing ratings, research, information and investment advisory services. tis the premier rating agency of Bangladesh in term of clients and ‘number of ratings. With sustainable competitive advantage arising from its strong brand, unmatched credibility, market leadership across businesses, and large customer base, it delivers ‘analysis, apinions, and solutions that make markets function better, It has a rich and diversified client base ranging from small enterprises to the largest corporations and financial institutions. CRAB possesses the major market share In Bangladesh ‘CRAB has conducted the highest number of ratings in Bangladesh which include ratings of large, smal and rmidsized entities. The number of small and midslzed entities rated by CRAB would be 1500 out of around 3500. The number of ratings would be more than 6000 a5 most of these entities have been rated several ‘umes (annual survelllance). The clients cover different industry sectors covering all the business centers ‘around the country This has given CRAB the opportunity of gathering insights and database of companies in = BOT in & Masur Eder) 100%RATING SCALES CORPARATE RATING SYMBOLS Corporate Entity/Bank Loan Rating (Long Term) (Prefix LR is added to symbols for Loan Rating) AAA (Triple A) AA, AA, AA, (Double A) A, A, A, (Single A) 888,888, 868, (ple B) BB, BB,, BB, (Double B) 8B, B, (Single B) CCC, CCC, CCC, (Triple C) CC (Doubie ¢) C(Single c) D (Default) CRAB-SE 1/ME 1 (CRAB-SE 2/ME 2 CRAB-SE 3/ME3 (CRAB-SE 4/ME A CCRAB-SE 5/ME 5 (CRAB-SE G/ME 6 CRAB-SE 7/ME7 CRAB-SE 8/ME& Extremely strong capacity to meet financial commitements, Highest quality. Minimal credit risk. ‘tong capacity to meet financial commitments. Very high quality. Very low credit risk. Stong capacity to meet financial commitments, High quality, Low credit risk, ‘Adequate capacity to meet financial commitments, Moderate credit risk. Speculative characteristics, Inadequate capacity to meet financial commitments. Speculative elements, Substantial credit risk. Weak capatity to meet financial commitments, Speculative elements, High credit risk, Very weak capacity to meet financial obligations, Very weak standi Very high credit risk. Extremely weak capacity to meet financial obligations. Highly speculative, Very near default. Highly wuinerable to non-payment of obligations. Payments may have been suspended in accordance with the instruments terms, Typically in defauit, with little prospect for recovery of principal or interest. Will atso be used upon the fling of a bankruptcy petition or similar action if payments on an obligation are eopardized. Corporate Entity/Bank Loan Rating (Short Term) Highest capacity for timely repayment of obligations. ‘Strong capacity for timely repayment of obligations. ‘Average capacity for timely repayment of obligations. Below Average Capacity for timely repayment of obligations, Inadequate capacity for timely repayment of obligations. High risk of default or are currently in default. ‘SME RATING SYMBOLS ‘The highest crelt-quality rating assigned by CRAB to an SE/ME The high credt-qualty rating assigned by CRAB to an SE/ME The adequate credit-qualty rating assigned by CRAB to an SE/ME The moderate credit-quality rating assigned by CRAB to an SE/ME ‘The inadequate credit-quality rating assigned by CRAB to an SE/ME The risk prone credit-quality rating assigned by CRAB to an SE/ME ‘The poor credit-quality rating assigned by CRAB to an SE/ME ‘The lowest credit-quality rating assigned by CRAB to an SE/ME ora rating sales vst wwe comb]MANAGEMENT HS Sohrawardhi Executive Vice President |& Company Secretary 01713 032807 Info@crab.combd Mohammed Tajul islam Senior Vice President & (Chief Rating Officer ‘01713 002320 tajul@creb.com.bd Ehsanul Kebir ‘Vee President & Head of Bank & FI Unit ‘01715 064775 ehsanbabir@erab.combd Khalid Hossin ‘Vice President & Head of Business Development ‘01727110027, Khaid@crab.com.bd CONTACTS RATING CONTACTS ‘CORPORATE aa Armes Assistant Vice President ‘coca, Corporate Patna Ut ‘ous sean radbabed@er com td ue thee Mola Assant Vice President ‘Coen, Corporate tng UNE ‘0119483510 Tar eahenBoe cam hd BANK & FI ‘Tabmina slam ‘Assistant Vie President ‘01730083580 tahrinallan@enb comb ‘Shahta Noor ‘Asstant Vie President (01670222808 sata eor@eabcon td Mavin Ahmed CoHerd& ‘Se Financial Aras 01921 797758 rmao@crabcon bd PROJECT Mirada CoHead & Astant 01730020040 rab @rdcom bd (Md, Nasu lam Bhuiyan CoHeada ‘5 Financial Arayst oie 116569 razui@eabcond CHITTAGONG Motammed Amin Team ener ‘Fanart 184326903 aningboonitd BUSINESS CONTACTS Mokammad Alamgtt Manager, Business Development 1713 202660 Wengr@owhcontd Tabassum Al Alter Deputy Manager, ‘osiness Development 1730 341088 fabasungerb com bt Mohammad Al Rezo ‘Aastan Manager ‘Susiess Development 176s e228 reaBenbrtngcom stat Utan Ahmed Asstant Manager Business Development 1952 sss sdatiaBeabratogcon, Tes Alam Prosun Sr. Ofer, Busnes Development 01963 090808 tamim@erbategcom ‘me. Sanfl stam Offer, Business Development 1911 985469, sad@crteatneson CLIENTS SERVICE & QUERIES Keya Afheen 1777 7561 retention antago Bornall Chowdhary 0177 758882 retention brabatngcom BILLS & ACCOUNTS ‘Md, Shari aman. Office Recounts ox7is.s7607 sharf@erabconbt BUSINESS ZONE IN CHARGE SYLHET & NARAYANGANI Mohammad Alamlt Manager (80) ‘01713202660 KHULNA & BARISAL ‘Tebassum Altar Deputy Manager (80) 01730341088 SAVAR & GAZIPUR Mohammad A Reza Assistant Manager (20) or7es 609225, MYMENSING ‘Ashraf Uddin Ahmed ‘sstant Manager (80) 962 324455 COMILLA Md, Srl lam officer (80) ‘91 985469 CHITTAGONG OFFICE Md, Abdul Khaeque Branch in-charge ov7i2 558611 ihaleque@crabombé Mohammad Monjurl Ahsan ‘Asstant Manager Business Developmant ‘1736869520 mahsinBeab.combd Rahat Alam Chowdhury Senior Officer Business Development ‘og 3078068 rahargeabranrgcon BOGRA OFFICE Mehedl Saker Branch in charge 1777758868 msaker@eabatingcom opaiateaingcomRATING FAQS 1, WHY IS CREDIT RATING NECESSARY AT ALL? Credit rating isan opinion expressed by an_ independent professional organisation, after ‘making a detailed study of all relevant factors. Such an opinion will be of great asistance to Investors in. making investment Cecisons. It also helps the issuers of debt instruments to price their Issues correctly ard to reach out to ew investors. Regulators lke Bangladesh Bark and Bangladesh Securities & Exchange Commission often use credit ating to determine eligiblity criteria for some Instrumens. Credit ratings are also used for determination of isk Weights for calculation of Capital Adequacy for Banks as per Basel 2 & 3 guidelines. In general, crecit rating is expected to bridge Information asymmetry in the market and establish, over a period of time, a more meaningful relationship between the quality of, debt and the yield from it. Credit Rating is also a valuable input in establishing business relationships cof various types. 2. WHAT IS THE IMPACT OF BASEL 2 & 3. ON BANKS IN BANGLADESH. Under the Basel 3. framework, banks will need to provide capital for credit risk based on the risk associated with thelr loan portfolios. bank has high-quality credit exposures (for exemple, if the majority ofits credit exposures are Inthe ‘AAA’ and'AA’ categories) it will save capital on account of credit isk; the difference is apparent in the illustration below. Conversely, a bank with relatively lower rated credit exposures will eed to prove more capital. ‘Additionally, banks will have to provide incremental capital for market risk and operational risk. Capital for operational risk was not part of the previous regulatory framework. 3. IS CREDIT RATING MANDATORY UNDER BASEL3 FOR ALL BANK ‘CLIENTS/EXPOSURES GIVEN BY BANKS? Credit rating is not mandatory Under Basel 3, However, banks are Iealy to be able to save capital if they get their counterpariesloan portfolios rated. If @ bank chooses to keep some of its clients/loans unrated, it may have to provide a risk weight of 125 per cent for credit rck on such loans. On the other hand, by getting lients/expecures rated, a bank can save capital on loans inthe higher rating categories, as shown in the ilustration above, CRAB expects pricing of fresh loans to be strongly correlated with the credit ratings that such loans carry. Higherrated ‘companies in particular will benefit from this, 4. SHOULD AGREEMENTS BE MADE WITH BANKS OR ITS CLIENT? The Rating agreement must be made between Bank's Client and Credit Rating Agency. The rating ‘must be solicited and accepted bya client for its use by Bank for capital adequacy calculation purpose, Banks may request and refer thelr clients for rating. 5. WHICH TYPES OF COMPANIES/ FACILITES ‘WILL BE RATED BY CRAB? CRAB will rate all types of companies and loans & werking capital facilites of banks, The loanfine of credit ratings Inctude project loans, corporate loans, general purpose loan, working capital demand loans, cash credit factities, and nonfund-based facilites ke letters of credit and bank guarantees. 6. HOWLONG WILLCRAB ‘TAKETO RATEA COMPANY/BANK LOAN? From the day it receives a writen request for # company or bank loan rating alongwith al lformation required for the analysis, ORAS will fate three to four weds to comglte the erie CAMS has already rated another company! facility belonging to the same troupenity the eremertal efor ‘involved in the analysis would be minimal and hence the stessment ‘could be carried out much faster, 7, WILL CRAB RATE EVERY ENTITY OF A GROUP (EVERY BANK FACILITY IN CASE OF LOAN RATING) SEPARATELY? CRAB will assign individual ratings to each entity ofa group in case of cent rating In case of bank loan, rating or felty rating, the rating wil also be for individual facility. ‘The validity of each rating will be linked to the tenure of the rated fecitey & WHAT INFORMATION ‘ARE REQUIRED FROM CLIENT FOR RATING? WHAT ABOUT THE CONFIDENTIALITY OF ‘THESE INFORMATION? CRAB would require information relating to franclal position (Gatance sheet, Income statement tc) operations, management, ‘owners, sister concerns, banking relations, suppliers & buyers, machinery, market, competion, tc. The information coleted from clients wil be kept confidential and. willbe used ony for rating. The fl rating report wil be elven only to lent, A brief rating rationale highlighting the determinants of the rating will be published once ‘the ratings accepted by cent. 9, HOW LONG WILLA, RATING BE VALID? Inital rating of @ company (entity) wll usually be valid for one year, In ‘ase of loan rating the long term ratings will be valid for one year, while the short term rating validity will be for 6 months or shorter ln-tase ofan exposure with shorter maturity. 110. IS CRAB CAPABLE OF HANDLING RATING REQUESTS FROM A LARGE NUMBER OF CORPORATES? ‘CRAB is fly geared to handle the expected rating requests on account of the new. capital ‘adequacy guidlines, and will be ‘able to tur such requests around Ina timely manner. Crab ‘confident of handling large umber of concurrent rating requests and providing high-quality ‘outputona timely basis. 111, WHO WILL PAY FOR THE RATINGS? Rating requests are usually made by the borrower, with payment of the applicable rating fee. However, CRAB can enter into specific arrangements for obtaining is fees from banks, In all case, CRAB will require the borrower to sign @ rating mandate before the rating exercises Initiated. 12, WHO RATES THE RATING COMPANIES? Informed pubic opinion will be the touchstone on which the rating ‘companies have tobe assessed and the success of 2 rating agency should be measured by the quality (of the senices effered, consistency and integrity, lustration of capital-eaving potential by banks on a loan of Tk. 1000 Milion| { | i i i i iHEAD OF ‘Sena Kalyan Bhaban (16th Floor) Suite # 1601-1602 195 Motihee! C/A Dhaks-1000 ‘Phone : 802 9571497. 7125490, 7118615, 0676208 9863857 Fax: 6602 Excel SM Tower (Ground Floor) Molaya Bhaban ({st Floor) 62, Zaki Hossain Road, GEC 484/A Reibahadur Road (Garibula Shah Mazar Road) \aleswartols, Bogre-5800 hulsh, Chittagong Phone 01777-768684 Phone: 081-6202, 082022 Email bogra@erabrating.com Fax : 091-632073, Email: Ag@erab.com bd