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Credit Rating

The document discusses credit ratings which are opinions on an entity's ability to repay financial obligations. It defines credit ratings, lists their features such as providing low cost information, and outlines the credit rating process which involves obtaining information, meetings, and communicating the rating decision.

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rajitha revanna
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18 views7 pages

Credit Rating

The document discusses credit ratings which are opinions on an entity's ability to repay financial obligations. It defines credit ratings, lists their features such as providing low cost information, and outlines the credit rating process which involves obtaining information, meetings, and communicating the rating decision.

Uploaded by

rajitha revanna
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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FINANCIAL MARKET AND SERVICES

INTRODUCTION TO CREDIT RATING


A credit rating is an opinion of a particular credit
agency regarding the ability and willingness an entity
(government, business, or individual) to fulfill its
financial obligations in completeness and within the
established due dates.
DEFINITION
A credit rating is a quantified assessment of the
creditworthiness of a borrower in general terms or with
respect to a financial obligation. Credit ratings
determine whether a borrower is approved for credit
as well as the interest rate at which it will be repaid.
FEATURES
Provides superior Information
Low cost information
Basis for a proper risk and return
Healthy discipline on corporate borrowers
Formation of public policy
PROCESS
1. Agreement
2. Appointment of analytical team
3. Obtaining information
4. Meeting the officials
5. Discussion about findings
6. Meeting of the rating committee
7. Communication of decision
8. Information to the public
9. Revision of the rating
IMPORTANCE OF CREDIT RATING
Better Investment Decision
Safety Assured
Easy Loan Approval
Competitive Rate of Interest

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