Credit rating – Assessment & Impact

Strictly Private & Confidential

Credit rating is the symbolic indicator of the current opinion of rating

agencies regarding the relative capability of issuer of debt instrument

Plays a vital role in strengthening the capital market and building the

investors’ confidence in the financial system

Credit rating industry in India is at a nascent stage as compared to the

credit rating scenario in developed countries

Aspects giving rise to Credit Rating The increasing role of capital and money markets consequent to

disintermediation;

Increased securitization of borrowing and lending consequent to

disintermediation;

Globalization of credit market;

Continuing growth of information technology;

Growth of confidence in the efficiency of the open market mechanism;

Withdrawal of Government safety nets and the trend towards

privatization

Advantages of Credit Rating Easy to raise resources

Reduced Cost of Borrowings

Reduced cost of public issue

Rating builds up image

Rating facilitates growth

Recognition to unknown companies

Disadvantages of Credit Rating Rating under unfavorable conditions

Down Grading will impact the interest of the company

THANK YOU

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