Pankaj Credit Rating

8/8/2019 Pankaj Credit Rating

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INTRODUCTION

Credit rating is essentially , the symbollic indicator

of the current opinion of the rating agency

regarding the relative ability and willinness of the

issuer of a financial instrument to met the service

obligation as and when they arise.

An assessment of the credit worthiness of

individuals and corporations. It is based upon the

history of borrowing and repayment, as well as the

availability of assets and extent of liabilities



Definition

Moody·s:´Ratings are designed exclusively for the

purpose of grading bonds according to their

investments qualitiesµ.



Concept

A current opinion on the relative creditworthiness

of debt.

An issue specific evaluation aimed at

differentiating credit qualityNot an audit of the issuing company.

Not a one time assessment of creditworthiness of

the issuer.

Not a general purpose certification of goodness of a company.

Not a recommendation to buy, hold or sell

the rated security.



Scope of Credit rating in INDIA

It is restricted to debt instrument.

Equity shares are not rated in INDIA.

There is strong need for credit rating in Capital

market.

Weapon in hands of investor.



Need for Credit Rating

Growing number of cases of defaults.

Maintenance of investors· confidence.

Motivate savers to invest in industry and trade



BENEFITSOFCREDIT RATING

for investor

Guides the investor in taking decisions

Provides low cost information

Safeguard against bankruptcy.

Encourages common man to invest.




to rated Companies

Companies with good rating can enter into market

confidently.

Used as a marketting tool.

Attract Foreign collaborators.

Barometer of financial discipline among corporates.




for Government

Provides investor protection.

Idle fund is channelised for the productive use.

Formulation of public Policy Guiodelines on

institutional investments



Features

It is with respect to particular instrument issued

by a company.

Not recommended for buying, holding and selling the instrument.

Does not create any legal relationship between

investor and rating agency.

It should be reviewed continuously.



Credit rating agency

Assigns credit ratings for issuers of certain typesof debt obligations.

Credit Rating Information Services of India

Limited (CRISIL)

Investment Information and Credit Rating Agencyof India (ICRA)

Credit Analysis & Research Limited (CARE)

Duff & Phelps Credit Rating India Private Ltd.

(DCR India)ONICRA Credit Rating Agency of India Ltd.

Fitch India



Brief Overview of ICRA

Came into existence in august 1991.

Authorised share capital of 10 crores and paid up

capital of 5 crores.

Second rating agency in India,



Objectives of ICRA

To guide investor in making decisions.

To assist issuer company in raising funds.

Act as a marketting tool

Create a healthy competitive environment in the

market.



Rating Process in ICRA

ICRA ISSUER

COMPANY

ANALYST

INHOUSERESEARC

H

Ratingcommittee

meeting

approachesappoints

r

e

p

o

r ti

n

g

Assignment of

symbol

Issues

symbol



RatingService

Grading service

Research and publication

ConsultingServices

Software development

Services of ICRA



Rating service

1) Corporate Debt Rating:

The Rating is based on an objective analysis of

the information and clarifications obtained fromthe entity, as also other sources considered

reliable by ICRA.



Rating service

2) Financial sector rating:

ICRA·s Financial Sector Debt Ratings coverentities like Banks and Financial Institutions, Non

Banking Finance Companies (NBFCs) and

Housing Finance Companies (HFCs,



Grading service

1) Health care Institutions:

- It can be used as a positioning and assessment

tool by the healthcare facility.- It can be used to define the complexity and

intensity of care provided.

- It can be used to bridge the knowledge gap

between the healthcare facility and the patient·sexpectations



The ICRA Healthcare Grading

Scale is as follows

H1 The Institution has resources and processes

consistent with those require for delivering the

highest quality of care.


consistent with those required for delivering a

high quality of care.


that can deliver moderate quality of care.


delivering low quality of care



Grading service

2) IPO Grading

ICRA·s Grading of Initial Public Offerings (IPOs) is

a service aimed at facilitating assessment of

equity issues offered to the public.

symbolic representation of ICRA·s assessment of

the ´fundamentalsµ of the issuer concerned on a

relative grading scale



ICRAs IPO grading

IPO Grade 5 Strong fundamentals

IPO Grade 4 Above-average fundamentals

IPO Grade 3 Average fundamentals

IPO Grade 2 Below-average fundamentalsIPO Grade 1 Poor fundamentals.



Rating symbol of ICRA

Long term Debentures, Bonds and Preference shares-Rating Symbols

LAAA : Highest Safety

LAA : High SafetyLA : Adequate Safety

LBBB : Moderate Safety

LBB : Inadequate Safety

LB : Risk prone

LC : Substantial Risk

LD : Default, Extremely speculative



Continued.

Medium term including Fixed deposits Rating

Symbols

MAAA: Highest Safety MAA: High Safety

MA : Adequate Safety MB :Inadequate Safety

MC : Risk prone MD : Default

Short-term including CPs

A-1: Highest Safety A-2: High SafetyA-3: Adequate Safety A-4: Risk prone

A-5: Default



Research and Publication

The ICRA Bulletin: Money & Finance is a periodical

publication directed towards institutions and

individuals.

Industry and Sector Analysis

Customised Research



Consulting service

ICRAManagement Consulting Services Limited

(IMaCS ) , a wholly-owned subsidiary of ICRA

Limited

Offers Consulting Services in Strategy, Risk

Management, Regulatory Economics, Transaction

Advisory, and Process Re-engineering. IMaCS'

clientele includes Banks & Financial ServiceCompanies



Software Development

ICRA Techno Analytics Limited (ICTEAS)

Axiom Technologies Limited a wholly-owned

subsidiary of ICTEAS specialises in customisationand implementation services on Oracle E-

Business Suite

ICRA Sapphire Inc. provides Net based solutionsto Large Corporations and Government agencies

in the US market



Conclusion

Thank u all.

Pankaj Credit Rating

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