CREDIT RATING

GWALIOR

Report file
On
Credit Rating & Its Impact

SUBMITTED TO SUBMITTED BY
Prof. Pooja Jain Amit Sharma
Tarush Bhardwaj
Sandeep Bhadoria
(BBA Semester)

Prestige Institute of Management

Opposite Deen Dayal Nagar, Bhind Road, Gwalior
Ph.0751-2470724, Fax-0751-470516
E-mail: Prestigegwl@sanchernet.in
Website: Prestige.gwl.

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DECLARATION

We are Amit Sharma , Sandeep Bhadoria and Tarush Bhardwaj student of BBA I Semester of
Prestige Institute of Management Gwalior, hereby declare that the Major Research Project report
entitled “credit rating and its impact” is submitted by us in the line of partial fulfillment of
course objectives for the Bacholar of Business Administration Degree.

We assure that this report is the result of our own efforts and that any other institute for the
award of any degree or diploma has not submitted it.

Date: Amit Sharma

Place: Tarus Bhardwaj
Sandeep Bhadoria

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CERTIFICATE

This is to certify that Amit Sharma , Sandeep Bhadoria and Tharush Bhardwaj Student of BBA
IIISemester of Prestige Institute of Management Gwalior has successfully completed her Major
Research Project Report. They have prepared this report entitled “credit rating & its impact”
under my direct supervision and guidance.

Prof. Pooja Jain

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ACKNOWLEDGEMENT

We Amit Sharma , Sandeep Bhadoria and Tharush Bhardwaj expressour sincere gratitude to
Prof. Pooja Jain for giving us the opportunity to work under his guidance on the report entitled
“Credit rating and its impact”.

We are grateful to our Director Dr. S. S. Bhakar, MRP coordinator Dr. GauravJaiswal, Faculty
Member and other friends for their valuable suggestions in the execution of report preparation.
We are also thankful to other staff that guided and helped us very kindly at each and every step
whenever we required.
We are also acknowledge & convey thanks to the library staff, computer department of PIMG for
their kind and valuable support.

Amit Sharma
Tarush Bhardwaj
Sandeep Bhadoria

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Table of Contents

EXECUTIVE SUMMARY ........................................................................................... 7

INTRODUCTION ......................................................................................................... 8

EVOLUTION .............................................................................................................. 11

TYPES OF RATING .................................................................................................. 13

BENEFITS OF CREDIT RATING ............................................................................ 15

BENEFITS TO INVESTORS ........................................................................................ 15

BENEFITS OF RATING TO THE COMPANY .......................................................... 18
BENEFITS TO BROKERS AND FINANCIAL INTERMEDIARIES ........................ 19

CREDIT RATING AGENCY..................................................................................... 20

USES OF RATINGS BY CREDIT RATING AGENCIES ........................................... 20

FUNCTIONS OF A CREDIT RATING AGENCY ...................................................... 21

CREDIT RATING IN INDIA .................................................................................... 23

CRISIL .......................................................................................................................... 25
ICRA ............................................................................................................................. 36
ONICRA CREDIT RATING AGENCY OF INDIA .................................................... 47
CREDIT ANALYSIS & RESEARCH LTD. (CARE) .................................................. 49
MOODY'S INVESTOR SERVICE ............................................................................... 55

DISADVANTAGES OF CREDIT RATING ............................................................ 65

IPO GRADING ......................................................................................................... 68

CRISIL IPO GRADING ............................................................................................... 69

CONCLUSION ......................................................................................................... 72

BIBLIOGRAPHY ..................................................................................................... 73

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EXECUTIVE SUMMARY

The project entitled “Credit Rating” gives you an insight to the most important concept in any
industry, be it service oriented or a manufacturing firm i.e. working capital.

Credit rating is a qualified assessment and formal evaluation of company’s credit history and
capability of repaying obligations. It measures the default probability of the borrower, and its
ability to repay fully and timely its financial debt obligations.

The main purpose of credit rating is to provide investors with comparable information on credit
risk based on standard rating scale, regardless of specifics of companies, separate sector of the
economy and country as a whole.

Credit rating has proven itself to be effective instrument of risk assessment in countries with
advanced economy since it demonstrates transparency of an enterprise. Credit rating reflects
financial, sectoral, operational, legal and organizational sides of companies, which characterize
ability and willingness duly and in full amount to repay obligations.

In world practice, credit rating can be assigned to sovereign governments, regional and local
executive bodies, corporations, financial organizations and etc.

Different Types of Credit Rating are explained in this project. Functions of Credit Rating are
highlighted.

Various advantages and limitation to Credit Rating are highlighted.

This project has also covered the Rating Process, Rating Symbols for short term debentures n
long term bonds, Rating Methodology, of various rating agencies like CRISIL, ICRA, SMERA,
ONICRA, CARE and International Rating Agency.

IPO Grading has also been included in this project.

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INTRODUCTION

Definition

CREDIT RATING
The evaluation of a people or businesses' ability and past performance in paying debts. A credit
rating is generally established by a credit bureau and used by merchants, suppliers, and bankers
to determine whether a loan should be granted or credit extended.

“A rating is an opinion on the future ability and legal obligation of the issuer to make timely
payments of principal and interest on a specific fixed income security. The rating measures
the probability that the issuer will default on the security over its life, which depending on the
instrument may be a matter of days to 30 years or more. In addition, long term ratings
incorporate an assessment of the expected monetary loss should a default occur."

"Credit ratings help investors by providing an easily recognizable, simple tool that couples a
possibly unknown issuer with an informative and meaningful symbol of credit quality."
Standard and Poor’s

Ratings, usually expressed in alphabetical or alphanumeric symbols, are a simple and easily
understood tool enabling the investor to differentiate between debt instruments based on their
underlying credit quality. The credit rating is thus a symbolic indicator of the current opinion
of the relative capability of the issuer to service its debt obligation in a timely fashion, with
specific reference to the instrument being rated. It is focused on communicating to the
investors, the relative ranking of the default loss probability for a given fixed income
investment, in comparison with other rated instruments.

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In fact, the rating is an opinion on the future ability and legal obligation of the issuer to make
timely payments of principal and interest on a specific fixed income security. The rating
measures the probability that the issuer will default on the security over its life, which
depending on the instrument may be a matter of days to 30 years or more. In addition, long-
term rating incorporates an assessment of the expected monetary loss should a default occur.
Credit rating helps investors by providing an easily recognizable, simple tool that couples a
possible unknown issuer with an informative and meaningful symbol of credit quality. Credit
rating can be defined as an expression, through use of symbols, of the opinion about credit
quality of the issuer of security/instrument. Credit rating does not amount to any
recommendation to purchase, sell or hold that security. It is concerned with an act of
assigning values by estimating worth or reputation of solvency, and honesty to repose trust in
a person's ability and intention to repay.

The ratings assigned are generally regarded in the investment community as an objective
evaluation of the probability that a borrower will default on a given security issue. Default
occurs whenever a security issuer is late in making one or more payments that it is legally
obligated to make. In the case of a bond, when any interest or principal payment falls due and
is not made on time, the bond is legally in default. While many defaulted bonds ultimately
resume the payment of principal and interest, others never do, and the issuing company winds
up in bankruptcy proceedings. In most instances, holders of bonds issued by a bankrupt
company receive only a part amount on his investments, invested, once the company's assets
are sold at auction. Thus, the investor who holds title to bankrupt bonds typically loses both
principal and interest. It is no wonder, then, that security ratings are so closely followed by
investors. In fact, many investors accept the ratings assigned by credit agencies as a substitute
for their own investigation of a security's investment quality.

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TYPES OF RATING

Following are the different kinds of rating:

(1) Bond/Debenture Rating

Rating the debentures/ bonds issued by corporates, government etc. is called debenture
or bond rating.

(2) Equity Rating

Rating of equity shares issued by a company is called equity rating.

(3) Preference Share Rating

Rating of preference share issued by a company is called preference share rating.

(4) Commercial Paper Rating

Commercial papers are instruments used for short-term borrowing. Commercial

papers are issued by manufacturing companies, finance companies, banks and
financial institutions and rating of these instruments is called commercial paper rating.

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(5) Fixed Deposits Rating

Fixed deposits programmes are medium term unsecured borrowings. Rating of such
programmes is called as fixed deposits rating.

(6) Borrowers Rating

Rating of borrowers is referred as borrower rating.

(7) Individuals Rating

Rating of individuals is called as individual's credit rating.

(8) Structured Obligation Rating

Structured obligations are also debt obligations and are different from debenture or
bond or fixed deposit programmes and commercial papers. Structured obligation is
generally asset-backed security. Credit rating agencies assessed the risk associated
with the transaction with the main trust on cash flows emerging from the asset would
be sufficient to meet committed payments, to the investors in worst case scenario.

(9) Sovereign Rating

Is a rating of a country, which is being considered whenever a loan is to be extended,

or some major investment is envisaged in a country.

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BENEFITS OF CREDIT RATING`

For different classes of persons different benefits accrue from the use of rated instruments.
The benefits directly accruing to investors through rated instruments are:

(A) BENEFITS TO INVESTORS

Investors are benefited in many ways if the corporate security in which they intend to invest
their saving has been rated. Some of the benefits are:

(1) Safeguards Against Bankruptcy

Credit rating of an instrument done by a credit rating agency gives an idea to the investors
about the degree of financial strength of the issuing company, which enables him to decide
about the investment. A highly rated instrument of a company gives an assurance to the
investors of the safety of that instrument and a minimum risk of bankruptcy.

(2) Recognition Of Risk

Credit rating provides investors with rating symbols that carry information in easily
recognizable manner for the benefit of investors to perceive the risk involved in the
investment. It becomes easier for the investors by looking at the symbol to understand the
worth of the issuing company. The rating symbol gives them the idea about the risk involved
or the expected advantages from the investment.

(3) Credibility Of Issuer

Rating gives a clue about the credibility of the issuing company. The rating agency is quite
independent of the issuer company and has no business connections or any relationship with it

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or its Board of Directors, etc. Absence of business links between the rater and the rated firm
establishes ground for credibility and attract investors.

(4) Easy Understandability Of Investment Proposal

An investor needs no analytical knowledge on his part and can understand the rating symbol.
The investor can take quick decisions about the investment to be made in any particular rated
security of a company.

(5) Saving Of Resources

Investors rely upon credit rating. This relieves investors from the hassle of acquiring
knowledge about the fundamentals of a company, its actual strength, financial standing,
management details, etc. The quality of credit rating done by professional experts of the credit
rating agency repose confidence in him to rely upon the rating for taking investment
decisions.

(B) BENEFITS OF RATING TO THE COMPANY

Company which had its credit instrument or security rated by a credit rating agency is
benefited in many ways as summarized below:

(1) Lower Cost Of Borrowing

A company with highly rated instrument has the opportunity to reduce the cost of borrowing
from the public by quoting lesser interest on fixed deposits or debentures or bonds as the
investors with low risk preference would come forward to invest in safe securities though
yielding marginally lower rate of return.

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(2) Wider Audience For Borrowing

A company with a highly rated instrument can approach the investors extensively for the
resource mobilization using the press media. Investors in different strata of the society could
be attracted by higher rated instrument, as the investors understand the degree of certainty
about timely payment of interest and principal on a debt instrument with better rating.

(3) Rating As Marketing Tool

Companies with rated instruments improve their own image and avail of the rating as a
marketing tool to create better image in dealing with its customers feel confident in the utility
products manufactured by the companies carrying higher rating for their credit instruments.

(4) Reduction Of Cost In Public Issues

A company with higher rated instrument is able to attract the investors and with least efforts
can raise funds. Thus, the rated company can economize and minimize cost of public issues
by controlling expenses on media coverage, conferences and other publicity stunts and
gimmicks. Rating facilitates best pricing and timing of issues.

(5) Motivation For Growth

Rating provides motivation to the company for growth as the promoters feel confident in
their own efforts and are encouraged to undertake expansion of their operations or new
projects. With better image created though higher credit rating the company can mobilize
funds from public and instructions or banks from self-assessment of its own status, which is
subject to self-discipline and self-improvement, it can perceive and avoid sickness.

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CREDIT RATING AGENCY

A credit rating agency (CRA) is a company that assigns credit ratings for issuers of certain types
of debt obligations. In most cases, these issuers are companies, cities, non-profit organizations,
or national governments issuing debt-like securities that can be traded on a secondary market. A
credit rating measures credit worthiness, the ability to pay back a loan, and affects the interest
rate applied to loans. (A company that issues credit scores for individual credit-worthiness is
generally called a credit bureau or consumer credit reporting agency.)

Interest rates are not the same for everyone, but instead are based on risk-based pricing, a form
of price discrimination based on the different expected costs of different borrowers, as set out in
their credit rating. There exist more than 100 rating agencies worldwide.

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FUNCTIONS OF A CREDIT RATING AGENCY

Credit rating serves the following functions:

(1) Provides Superior Information:

It provides superior information on credit risk for three reasons:

(i) It is an independent rating agency, and is likely to provide an unbiased opinion; unlike
brokers, financial intermediaries and underwriters who have a vested interest in the issue,

(ii) Due to professional and highly trained staff, their ability to assess risk is better, and
finally,

(iii) The rating firm has access to a lot of information, which may not be publicly available.

(2) Low Cost Information

A rating firm gathers, analyses, interprets and summarizes complex information in a simple
and readily understood formal manner. It is highly welcome by most investors who find it
prohibitively expensive and simply impossible to do such credit evaluation of their own.

(3) Basis For A Proper Risk And Return

If an instrument is rated by a credit rating agency, then such instrument enjoys higher
confidence from investors. Investors have some idea as to what is the risk that he/she is likely
to take, if investment is done in that security.

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(4) Healthy Discipline On Corporate Borrowers

Higher credit rating to any credit investment tends to enhance the corporate image and
visibility and hence it induces a healthy discipline on corporates.

(5) Greater Credence To Financial And Other Representation

When a credit rating agency rates a security, its own reputation is at stake.
Therefore, it seeks high quality financial and other information. As the issue complies with
the demands of the credit rating agency on a continuing basis, its financial and other
representations acquire greater credibility.

(6) Formation Of Public Policy

Public policy guidelines on what kinds of securities are eligible for inclusions in different
kinds of institutional portfolios can be developed with greater confidence if debt securities are
rated professionally.

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CREDIT RATING IN INDIA

In the Indian context, the scope of credit rating is limited generally to debt, commercial paper,
fixed deposits, mutual funds and of late IPO’s as well. Therefore, it is the instrument, which is
rated, and not the company. In other words, credit quality is not general evaluation of issuing
organization, i.e. if debt of company XYZ is rated AAA and debt of company ABC is rated
BBB, then it does not mean firm XYZ is better than firm ABC. However, the issuer company
gets strength and credibility with the grade of rating awarded to the credit instrument it
intends to issue to the public to raise funds. Rating, in a way, reflects the issuer's strength and
soundness of operations and management. It expresses a view on its prospective composite
performance and the organizational behaviour based on the study of past results.

CRAs registered with SEBI.

Name of the CRA Year of commencement

of Operations
CRISIL 1988
ICRA 1991
CARE 1993
Fitch India 1996
Brickworks 2008

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CRISIL

Credit Rating Information Services Of India Limited (CRISIL) has been promoted by
Industrial Credit and Investment Corporation of India Ltd. (ICICI) and Unit Trust of India
Ltd. (UTI) as a public limited company with its headquarters at Mumbai. CRISIL,
incorporated in 1987, pioneered the concept of credit rating in India and developed the
methodology for rating of debt in the context of India's financial, monetary and regulatory
system. It was the first rating agency to rate Commercial Paper Programme in 1989, debt
instruments of financial institutions and banks in 1992 and asset-backed securities in 1992.

The main objective of CRISIL has been to rate debt obligation of Indian companies. Its rating
provides a guide to the investors as to the risk of timely payment of interest and principal on a
particular debt instrument. Its rating creates awareness of the concept of credit rating amongst
corporations, merchant bankers, brokers, regulatory authorities, and helps in creating
environment that facilitates the debt rating.

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CRISIL’S RATING SYMBOLS FOR LONG TERM

INSTRUMENTS

Investment Grade Ratings:

AAA
(Triple A) Highest Safety

Instruments rated 'AAA' are judged to offer the highest degree of safety with regard to timely
payment of financial obligations. Any adverse changes in circumstances are most unlikely to
affect the payments on the instrument

AA
(Double A) High Safety

Instruments rated 'AA' are judged to offer a high degree of safety with regard to timely
payment of financial obligations. They differ only marginally in safety from `AAA' issues.

Speculative Grade Ratings:

BB
(Double B) Inadequate Safety

Instruments rated 'BB' are judged to carry inadequate safety with regard to timely payment of
financial obligations; they are less likely to default in the immediate future than other speculative
grade instruments, but an adverse change in circumstances could lead to inadequate capacity to
make payment on financial obligations.

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B
High Risk

Instruments rated 'B' are judged to have greater likelihood of default; while currently financial
obligations are met, adverse business or economic conditions would lead to lack of ability or
willingness to pay interest or principal.

RATING SYMBOL FOR SHORT TERM INSTRUMENT

P-1 This rating indicates that the degree of safety regarding timely payment on the instrument is
very strong.

P-2 This rating indicates that the degree of safety regarding timely payment on the instrument is
strong; however, the relative degree of safety is lower than that for instruments rated 'P-1'.

P-3 - This rating indicates that the degree of safety regarding timely payment on the instrument
is adequate; however, the instrument is more vulnerable to the adverse effects of changing
circumstances than an instrument rated in the two higher categories.

P-4 - This rating indicates that the degree of safety regarding timely payment on the instrument
is minimal and it is likely to be adversely affected by short-term adversity or less favourable
conditions.

P-5 - This rating indicates that the instrument is expected to be in default on maturity or is in
default.

NM - Instruments rated 'N.M' have factors present in them, which render the rating outstanding
meaningless. These include reorganisation or liquidation of the issuer, the obligation is under
dispute in a court of law or before a statutory authority etc.
Not Meaningful

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ICRA

ICRA Limited (an Associate of Moody's Investors Service) was incorporated in 1991 as an
independent and professional company. ICRA is a leading provider of investment information
and credit rating services in India. ICRA’s major shareholders include Moody's Investors Service
and leading Indian financial institutions and banks. With the growth and globalization of the
Indian capital markets leading to an exponential surge in demand for professional credit risk
analysis, ICRA has been proactive in widening its service offerings, executing assignments
including credit ratings, equity gradings, specialized performance grading and mandated studies
spanning diverse industrial sectors. In addition to being a leading credit rating agency with
expertise in virtually every sector of the Indian economy, ICRA has broad-based its services for
the corporate and financial sectors, both in India and overseas, and currently offers its services
under the following banners:

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ICRA Limited (an Associate of Moody's Investors Service) was incorporated in 1991 as an
independent and professional company. ICRA is a leading provider of investment information
and credit rating services in India. ICRA’s major shareholders include Moody's Investors Service
and leading Indian financial institutions and banks

Rating Scale of ICRA

Long Term — Including Debentures Bonds, Preference Shares

LAAA: Highest Safety:

It indicates fundamentally strong position. Risk factors are negligible. There may be
circumstances adversely affecting the degree of safety but such circumstances, as may
visualized, are not likely to affect the timely payment of principal and interest as per times.

LAA+,LAA, LAA- : High Safety:

Risk factors are modest and may vary slightly. The protective factors are strong and the
prospect of timely payment of principal and interest as per terms and interest under adverse
circumstances, as may be visualized, differs from LAAA only marginally.

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Medium Term - including Certificates of Deposits and Fixed Deposits

Programmes

MAAA: Highest Safety

The prospect of timely servicing of interest and principal as per terms is the best.

MAA+, MAA, MAA- High Safety

The prospect of timely servicing of interest and principal as per terms is high, but not as high
as in MAAA rating.

Short Term - including Commercial Papers

Al+, A1 Highest Safety

The prospect of timely payment of debt/obligation is the best.

A2+, A1 High Safety

The relative safety is marginally lower than A1

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ONICRA CREDIT RATING AGENCY OF INDIA

ONICRA CREDIT RATING AGENCY OF INDIA Ltd. is recognised as the pioneers of the
concept of individual Credit rating in India. After being the first to introduce the concept, Onicra
has been continuously conducting in-depth research into all aspects of the behaviour of credit
seekers and has developed a comprehensive rating system for various types of credit extensions.
Onicra provides a platform to credit seekers and granters build long lasting relationship.

Credit Rating

With the advance of credit, the principal has an increased level of exposure in the market. So, a
mandatory check is done to assess the credentials of the individual in question before extending a
loan or advance. We assess the financial visibility and look into all related aspects. We have an
in-house developed credit rating module which is customized to suit various customer
requirements.

Associate Rating

We provide an objective assessment of existing and potential associates of our clients, with
reference to infrastructure, resources, adherence to defined system and processes and
commitment to their customers. This evaluation helps our clients understand the value their
associates bring to their business relationships.

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CARE

Credit Analysis & Research Ltd. (CARE), incorporated in April 1993, is a credit rating,
information and advisory services company promoted by Industrial Development Bank of India
(IDBI), Canara Bank, Unit Trust of India (UTI) and other leading banks and financial services
companies. In all CARE has 14 shareholders.

CARE assigned its first rating in November 1993, and up to March 31, 2006, had completed
3175 rating assignments for an aggregate value of about Rs 5231 billion. CARE's ratings are
recognized by the Government of India and all regulatory authorities including the Reserve Bank
of India (RBI), and the Securities and Exchange Board of India (SEBI). CARE has been granted
registration by SEBI under the Securities & Exchange Board of India (Credit Rating Agencies)
Regulations, 1999.

RATING SYMBOLS OF CARE

A. Long-Term And Medium Term Instrument

CARE AAA (FD)/(CD)/(SO)

Instruments carrying this rating are considered to be of the best quality, carrying negligible
investment risk. Debt service payments are protected by stable cash flows with good margin.
While the underlying assumptions may change, such changes as can be visualized are most
unlikely to impair the strong position of such instruments.

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CARE AA (FD)/(CD)/(SO)

Instruments carrying this rating are judged to be of high quality by all standards. They are
also classified as high investment grade. They are rated lower than CARE AAA securities
because of somewhat lower margins of protection. Changes in assumptions may have a
greater impact on the long-term risks may be somewhat larger. Overall, the difference with
CARE AAA rated securities is marginal.

B. Short-Term Instruments

Instruments with maturities of one year or less are classified in this category. These include:
CP - Commercial Paper and ICD - Inter-Corporate Deposits

PR-1
Instruments would have superior capacity for repayment of short-term promissory obligation.
Issuers of such PR-instruments will normally be characterized by leading market position in
established industries, high rates of return on funds employed etc.

PR-2
Instruments would have strong capacity for repayment of short-term promissory obligations.
Issuers would have most of the characteristics as for those with PR1 instruments but to a
lesser degree.

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Moody's Investor Service

Today, Moody's Investor Service rates thousands of issues of corporate and municipal bonds,
commercial paper, short-term municipal notes, and preferred stock. These security ratings are
reported in Moody's Bond Record, which is published monthly. In addition to assigning issue
ratings, Moody's also notes for its subscribers the essential terms on each security issue; dates
when interest, principal or dividend payments are due; call provisions (if any); registration
status; bid and asked price quotations; yield to maturity; tax status; coverage; and amount of
securities outstanding.

Moody's Corporate Bond Ratings

The credit ratings assigned by Moody's to corporate bonds are listed below with the
definitions of each rating category:

AAA

Bonds, which are rated Aaa, are judged to be of the best quality. They carry the smallest
degree of investment risk and are generally referred to as "gilt edge". Interest payments are
protected by a large or by an exceptionally stable margin and principal is secure. While the
various protective elements are likely to change, such changes as can be visualized are most
likely to impair the fundamentally strong position of such issues.

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AA

Bonds, which are rated Aa, are judged to be of high quality by all standards. Together with
the AAA group they comprise what are generally known as high-grade bonds. They are rated
lower than the best bonds because margins of protection may not be as large as in Aaa
securities or fluctuation of protective elements may be of greater amplitude or there may be
other elements present which make the long-term risks appear somewhat larger than in Aaa
securities.

Bonds, which are rated A, possess many favourable investment attributes and are to be
considered as upper medium-grade obligations. Factors giving security to principal and
interest are considered adequate but elements may be present which suggest a susceptibility to
impairment sometime in the future.

Moody's Commercial Paper Ratings

Promissory notes sold in the open market by large corporations and having an original
maturity of nine months or less are known as commercial paper. Moody's assigns those
commercial notes it is willing to rate to one of three quality categories:

Prime-1 (or P-l) - Highest quality

Prime-2 (or P-2) - Higher quality
Prime-3 (or P-3) - High quality

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CONCLUSION

Thus we can say that Credit rating is a qualified assessment and formal evaluation of company’s
credit history and capability of repaying obligations. It measures the default probability of the
borrower, and its ability to repay fully and timely its financial debt obligations.

The main purpose of credit rating is to provide investors with comparable information on credit
risk based on standard rating scale, regardless of specifics of companies, separate sector of the
economy and country as a whole.

Credit rating has proven itself to be effective instrument of risk assessment in countries with
advanced economy since it demonstrates transparency of an enterprise. Credit rating reflects
financial, sectorial, operational, legal and organizational sides of companies, which characterize
ability and willingness duly and in full amount to repay obligations

In world practice, credit rating can be assigned to sovereign governments, regional and local
executive bodies, corporations, financial organizations and etc.

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BIBLIOGRAPHY

www.crisil.com
www.stretcher.com
www.careratings.com
www.onicra.com
www.care.org
www.careratings.com
www.smera.in
www.sebi.gov.in
www.hindubusiness.com
www.wikipedia.org

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