Credit Rating Services – Risk Evaluation Agencies

Introduction

If a company asks you for a loan, how do you know it will repay? You can't analyze its balance sheet. You rely on Credit Rating.

1. What is Credit Rating?

An unbiased opinion on the ability and willingness of an entity to service its debt obligations.

• Symbolic: Expressed in letters (AAA, AA, B, D).
• Not a Recommendation: It doesn't say "Buy this bond". It just considers the risk.

2. Rating Symbols (Standard)

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3. Major Agencies in India

1. CRISIL (Owned by S&P Global).
2. ICRA (Owned by Moody's).
3. CARE.
4. India Ratings (Fitch).

4. Benefits

• For Investor: Easy risk assessment. "AAA is safe".
• For Company: High rating = Low interest rate on loans.

Summary

• Focus: Debt Repayment Capacity.
• Agencies: CRISIL, ICRA, CARE.
• Grade: Investment Grade (BBB-) vs Junk.

Quiz Time! 🎯

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