BIBLIOGRAPHY - Shodhgangashodhganga.inflibnet.ac.in/.../37151/1/bibliography.pdfEdward I. Altman...

BIBLIOGRAPHY

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Websites

www.care.in

www.cibil.com

www.icra.com

www.sebiguidelines.in

www.smera.in


INDIVIDUAL INVESTORS’ PERCEPTION TOWARDSWORKING OF CREDIT RATING AGENCIES - A STUDY IN ERODE

AND COIMBATORE DISTRICTS

QUESTIONNAIRE 1. Age

a) Below 30 years b) 31-40 years c) 41-50 years d) Above 51 years

2. Gender a) Male b) Female

3. Educational Qualification a) Up to HSC b) Diploma / Technical c) Graduate d) Professional

4. Marital status a) Unmarried b) Married

5. Nature of family a) Joint family b) Nuclear family

6. Occupation a) Business b) Government Employee c) Private Employee d) Professional e) Agriculture

7. Monthly Income a) Below 10,000 b) 10,001-20,000 c) 20001- 30,000 e) Above 30,000

8. How much do you save annually? a) Below 1,00,000 b) 1,00,001-2,00,000 c) Above 2,00,000

9. What is your current preference of Savings Avenue? a) Life insurance b) Bonds / debentures c) Shares e) Bank deposits f) Real Estate g) Gold

10. What is your attitude towards fluctuations in the value of your investment portfolio? a) Accept higher volatility

as growth is the goal b) Accept lower long returns with

maximum stability c) Accept little volatility and

average return e) Accept average volatility and

average return f) Accept substantial

volatility and maximum return


11. What is your willingness to take risk ? a) Willing to take

moderate risk b) Willing to take as much

risk as possible c) Avoid taking risk

12. How would you keep track of your investment portfolio? a) Self assessment b) Through financial advisors c) Through the portfolio

tracker on the website e) By calculating on computer by

inserting current prices 13. How long are you in the investment arena?

a) < 5 Years b) 5 - 10 Years c) 11 - 15 Years e) > 15 Years

14. What is the investment horizon of your portfolio? a) Very short period b) Short term c) Medium term e) Long term

15. Specify the current size of your investment portfolio a) Below 10,00,000 b) 10,00,001-20,00,000 c) 20,00,001- 30,00,000 e) Above 30,00,000

16. Rank the best sources for taking investment decision. Variables 1 2 3 4 5 6

Self decision Newspapers and Magazines Signs and symbols awarded by rated agencies Research Reports With the help of financial advisors Company websites

17. State the factors which influence the investment decisions.

Factors Very Important Important Less

Important Not

Important Not at All Important

Recent trends in capital market

Rating symbols Proportion of risk Brand name/Goodwill of the company

NAV and every trading day progress

Past performance Investment philosophy

Volume of business


18. How did you come to know about rating agencies? a) E-media b) Financial Advisors / Brokers c) Prospectus e) News papers & Magazines f) Other Investors

19. Are you aware of the following rating agencies available in India?

S.No Rating Agencies Aware To Some Extent Unaware

i) CRISIL ii) ICRA iii) CARE iv) FITCH v) BRICKWORKS vi) ONICRA vii) Others

20. What is your experience in the field of investing in rated securities? a) Up to 5 Years b) 6 - 10 Years c) Above 10 Years

21. Make a tick mark of rated instruments you have already acquired. (Multiple Response)

a) Bonds / Debentures b) Equities c) Preference share d) Commercial paper e) Fixed deposit f) Mutual fund schemes g) Insurance policies h) Collective investment schemes i) Bank loan j) Others (specify) _______

22. Are you aware of the factors considered by rating agencies?

[3] Aware [2] Partially Aware [1] Unaware

S.No Services 3 2 1 i) Business Analysis ii) Financial Analysis iii) Management Evaluation iv) Regulatory and competitive environment v) Fundamental Analysis

23. What is your level of importance regarding the financial and non-financial rated

instruments of Indian capital market?

[5] Highly Favourable[4] Favourable [3] Somewhatfavourable

[2] Not very favourable[1] Not at all favourable

S.No Financial Products 5 4 3 2 1 1. Bonds/Debentures 2. Commercial papers 3. Structured financial products


S.No Financial Products 5 4 3 2 1 4. Bank loans 5. Fixed deposits by NBFCs 6. Mutual fund debt schemes 7. Initial public offer 8. Shares 9. Rating of insurance policies 10. State Government borrowings 11. Structured obligations 12. Developer rating 13. Broker grading 14. Value creation rating 15. MFI grading 16. NSIC grading 17. Contractor grading 18. Institutional grading 19. Corporate governance rating 20. Project finance rating

24. State your opinion towards the following statements.

[5] Strongly Agree [4] Agree [3] Neutral [2] Disagree [1] Strongly Disagree

S.No Variables on Awareness CRAs 5 4 3 2 1 1. Awarding rating symbols to financial instruments 2. Ratings mandatory for listed company 3. Rating changes over time 4. Rating alone is not foolproof for stock behaviour 5. Rating depends on company performance 6. Rating depends on information flows by companies 7. CRAs offer advice and not a guarantor for return on

investment

8. I know major rating agencies in India 9. Rating is done by an independent agency 10. I am able to differentiate the rating symbols of CRAs 11. I consider ratings of CRAs while taking investment

decisions

12. I am aware of diversified services provided by rating agencies

13. I am able to understand the rating methodology employed by the rating agencies



[5] Strongly Agree [4] Agree [3] Neutral [2] Disagree [1] Strongly Disagree

S.No Variables on Investors’ Attitude 5 4 3 2 1 1. Rating simplifies decision making process 2. Rating is unbiased 3. Rating creates confidence among investors by

establishing credibility and goodwill

4. I usually don’t consult market brokers to select the rated instruments

5. CRAs suggest the best investment portfolio 6. I always accept that rated instruments safeguard against

bankruptcy

7. I often browse CRA web sites or markets just for something to do, rather than to invest something specific

8. Rating surveillance of CRAs cautions the investors about risk in their investment

9. CRAs perform full-fledged service to investors 10. CRAs intimate the past, present and future trend on

instruments

11. The reports published by rating agencies are factually correct

12. I prefer to invest in rated securities only 13. CRAs give individual attention to all investors 14. Safeguard the investors 15. Rating is recognised by buyers and suppliers 16. I am usually able to get all information from CRAs

analyst

17. I always prefer to browse the company website regarding ratings

18. CRAs provide additional investment guide through rating symbols

19. I can get information through CRA websites about capital market trend

20. I like to have a great deal of information about default risk in repayment of instruments

26. What type of difficulties have you faced in believing the rating services?

a) Low level of transparency b) Time and cost constraints

c) Dual rating options d) Periodical change in rating symbols

e) Bias in ratings f) Split rating

g) Default risk on securities h) Unaware of rating agencies

i) Complexity to understand the

symbols of ratings



S.No Variables Very Important Important Less

Important Not

Important Not at All Important

1. Comparability of ratings and display on common site

2. Public education on usage of ratings

3. Public disclosure on ownership pattern of CRAs

4. Timeliness of ratings

5. Policy on disclaimer on ratings

6. Policy on unsolicited ratings

7. Enforcing corporate governance in spirit

8. Disclosures of methodologies of rating

9. Uniformity in rating of CRAs

************


ANNEXURE - II

RATING SYMBOLS OF SELECTED INTERNATIONAL CREDIT RATING AGENCIES

Rating symbols of selected international credit rating agencies are presented

in the following table.

Rating Details of Select International Rating Agencies

S.No Rating agency Symbols Relative/ Absolute

1 A M Best Co A++, A+, A, A, B++, B+, B, B-, C++, C+, C, C-, D, E.F.S Relative

2 Dun & Bradstreet AAA, AA, A, B, C Relative

3 Japan Credit Rating Agency Ltd (JCR)

AAA, AA+, AA, AA-, A+, A, A-, BBB+, BBB, BBB-, BB+, BB, BB-, B+, B, B-, CCC, CC, C, D

4

Japan Rating and Investment Information Inc (R&l)

AAA, AA+, AA, AA-, A+, A, A-, BBB+, BBB, BBB-, BB+, BB, BB-, B+, B, B-, CCC, CC,

5 KMV Corporation NA Absolute (Compute PDS)

6 Moody's Investors Service

Aaa, Aa1, Aa2, Aa3, A1, A2, A3, Baal, Baa2, Baa3, Ba1, Ba2, Ba3, B1, B2, B3, Caa1, Caa2, Caa3, Ca, C

Relative

7 Standard & Poor's AAA, AA+, AA, AA-, A+, A, A-, BBB+, BBB, BBB-, BB+, BB, BB-, B+, B, B-, CCC+, CCC, CCC-, CC

Relative

8 Duff & Phelps Credit Rating Co (Merged)

AAA, AA+, AA, AA-, A+, A, A-, BBB+, BBB, BBB-, BB+, BB, BB-, B+, B, B-, CCC, DD

Relative

9 Fitch IBCA (Merged)

AAA, AA+, AA, AA-, A+, A, A-, BBB+, BBB, BBB-, BB+, BB, BB-, B+, B, B-, CCC+, CCC, CCC-, CC, Don, nn, n

Relative

10 Fitch (2000) (Merged)

AAA, AA+, AA, AA-, A+, A, A-, BBB+, BBB, BBB-, BB+, BB, BB-, B+, B, B-, CCC+, CCC, CCC-, CC, C, nnn, nn, D

Relative

Source: Websites of respective rating agencies


RATING SYMBOLS OF INDIAN CREDIT RATING AGENCIES

Rating symbols for long term debt instrument ratings of Indian credit rating

agencies are presented in the following table.

Comparative Rating Symbols for Long term debt instrument ratings

Ratings CRISIL CARE ICRA FITCH BRICK WORKS

Highest degree of safety with regard to timely payment of financial obligations

CRISIL AAA

CARE AAA LAAA AAA

(Ind) BWR AAA

High degree of safety with regard to timely payment of financial obligation

CRISIL AA

CARE AA LAA AA(Ind) BWR

AA

Adequate degree of safety with regard to timely payment of financial obligations

CRISIL A

CARE A LA A(Ind) BWR

A

Moderate safety with regard to timely payment of financial obligations

CRISIL BBB

CARE BBB LBBB BBB(Ind) BWR

BBB

Inadequate safety with regard to timely payment of financial obligations

CRISIL BB

CARE BB LBB BB(Ind) BWR

BB

Greater likelihood of default; while currently financial obligations are met, adverse business or economic conditions would lead to lack of ability to pay interest and principal.

CRISIL B

CARE B LB B(Ind) BWR

B



Vulnerable to default, timely payment is possible only if favorable circumstances continue.

CRISIL C

CARE C LC

CCC(Ind) CC(Ind) C(Ind)

BWR C

In default or are expected to default on scheduled payment dates. Such instruments are extremely speculative and returns may be relised only on reorganization or liquidation.

CRISIL D

CARE D LD DDD(Ind)

DD(Ind)D(Ind) BWR

D

Instruments rated N.M have factors present in them, which render the rating outstanding meaningless.

NM - - - -



Comparative Rating Symbols for short term debt instrument ratings

Rating symbols for short term debt instrument ratings of Indian credit rating

agencies are presented in the following table.

Comparative Rating Symbols for Short-term Debt Instrument Ratings


Instruments with this rating are considered to have very strong degree of safety regarding timely payment of financial obligations. Such instruments carry the lowest credit risk.

CRISIL A1 CARE A1

ICRA A1 F1 BWR A1

Instruments with this rating are considered to have strong degree of safety regarding timely payment of financial obligations. Such instruments carry low credit risk.

CRISILA2 CARE A2

ICRA A2 F2 BWR A2

Instruments with this rating are considered to have moderate degree of safety regarding timely payment of financial obligations. Such instruments carry higher credit risk as compared to instruments rated in the two higher categories.

CRISIL A3 CARE A3

ICRA A3 F3 BWR A3

Instruments with this rating are considered to have minimal degree of safety regarding timely payment of financial obligations. Such Instruments carry very high credit risk and are susceptible to default.

CRISIL A4 CARE A4

ICRA A4 B BWR A4

Instruments with this rating are in default or expected to be in default on maturity.

CRISIL D CARE D

ICRA D C/RD/D BWR D



BIBLIOGRAPHY - Shodhgangashodhganga.inflibnet.ac.in/.../37151/1/bibliography.pdfEdward I. Altman...

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