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Rate the companies based on various analysis
The credit worthiness of an individual,corporation, or even a country.
Analyses financial history and current assetsand liabilities.
Tells a lender or investor the probability of thesubject being able to pay back a loan.
Faster and easier availability of loans
Increased publicity
CREDIT RATING AGENCIES
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CRISIL : Credit rating information services of India
limited.
ICRA: Investment Information & credit ratingagency of India limited.
CARE : Credit analysis & research limited.
FITCH ratings India private limited.
INDIAN CREDIT RATING AGENCIES
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Credit RatingsMethodology
Business
Risk Profile
Analysis
Financial
Risk Profile
Analysis
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BusinessRisk
Country
Risk
Company
Position
Industry
Factors
Profitability
/ Peer GroupComparisons
Political
Economic
Industry Specific factors
Foreign exchange
Industry Trends
Industry Structure
Market Size
Growth Potential
Competition
Changing Technology
Competitive Factors Market position
Keys to Success
Size
Diversification
Management
Validation of Company
Position
Trends
Quality of Earnings& Analytical adjustments
Peer Group Comparisons
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FinancialRisk
Accounting
Cash Flow
Adequacy
GovernanceRisk
Liquidity /
Short-term
Factors
Accounting Regime
Reporting & Disclosure
Analytical adjustments
Ownership
Board of directors Management practices
Financial Strategy
Risk Tolerance
Accounting Practices
Internal controls
Focus on debtservice capability
Analytical distinctions with
profitability
Cash flow measures /
ratios
Operating sources & uses
Of liquidity
Debt Characteristics Bank credit facilities
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CRISIL(CREDIT RATING AND INFORMATION
SERVICES OF INDIA LTD.)
A global analytical company.
Incorporated in year 1987.
Provides ratings research and policy advisory services.
CRISIL is India's leading rating agency, and is the fourth largest in
the world.
Offerings-real Timenews, Analysed data , incisive insights & opinions
&expert advice.
So far CRISIL has 30000 debt instruments covering the entire debt
market.
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DEBT OBLIGATIONS RATED BY CRISIL
INCLUDE
Non convertible debentures/bonds/preferenceshares
Commercial papers/certificate of deposits/shortterm debt
Fixed deposits
Loans
Structured debts
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FUNCTIONS OF CRISIL
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CRISIL LONG TERM RATING SCALE
CRISIL AAA (Highest Safety)
CRISIL AA (High Safety)
CRISIL A (Adequate Safety)
CRISIL BBB (Moderate Safety)
CRISIL BB (Moderate Risk)
CRISIL B (High Risk)
CRISIL C (Very High Risk)
CRISIL D (Default)
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CRISIL SHORT TERM RATING SCALE
CRISIL P1
CRISIL P2
CRISIL P3
CRISIL P4
CRISIL P5
P1= Safety Regarding Timely Payment OnThe Instrument Is Very Strong
P2= Safety Regarding Timely Payment On TheIstrument Is Very Strong.However, Safety Is LowerThan Instruments Rated In P1
P3= Instruments Is More Vulnerable To TheAdverse Effects Of Changing CircumstancesP4= It Is Likely To Be Affected By Short Term OrLess Favourable ConditionsP5= Instruments Is Expected To Be DefaultOn Maturity
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ICRA was set up by IFCI on 16th january 1991.
A public limited company.
An authorized share capital of rs.10crores, rs. 5 crores is paid up.
To provide information & guidance to investors.
ICRAS major shareholders IFCI (26%).
Determines the credit risk associated with a debt instrument.
ICRA : INVESTMENT INFORMATION & CREDIT
RATING AGENCY OF INDIA LIMITED.
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ICRA LAAA
ICRA LAA
ICRA LA
ICRA LBBB
ICRA LBB
ICRA LBICRA LC
ICRA LD
ICRA LONG TERM RATING SCALE
LAAA= Highest Credit Quality RatingLAA= High Credit Quality RatingAnd It Carries Lowest Credit RiskLA= Adequate Credit Quality Rating& It Carries Average Credit Risk
LBBB= Moderate Credit Quality Rating &This Instrument Carries Higher ThenAverage Credit Risk
LBB= Inadequate Credit QualityAnd It Carries High Credit RiskLB= Risk Prone Credit Quality Rating AndIt Carries Very High Credit Risk
LC= Poor Credit Quality Rating & ThisInstrument Has Limited Prospectus OfRecovery
LD= Lowest Credit Rating & ThisInstrument Has Very Low Prospectus OfRecovery
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ICRA SHORT TERM RATING SCALE
ICRA A1
ICRA A2
ICRA A3
ICRA A4
ICRA A5
A1= Highest Credit Policy Rating ToShort Term Debt Instruments
A2= Average Credit Quality Rating To Short Term
Debt Instruments & This Instrument Carries HigherCredit Risk Than A1
A3= Moderate Credit Quality Rating
To Short Term Debt Instruments
A4= Risk Prone Moderate Credit Quality
Rating To Short Term Debt Instruments
A5= Lowest Credit Quality Rating To Short Term
Debt Instruments & This Instrument Carry VeryLow Prospects Of Recovery
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