ICRA LimitedAn Associate of Moody’s Investor Services

Credit Rating and Access to Institutional Credit

June 2013ICRA Limited

ICRA LimitedAn Associate of Moody’s Investor Services

1. Credit Rating Overview

2. Applications of Credit Rating

3. Role of Credit Rating Agencies

4. ICRA Overview

Agenda

June 2013

June 2013ICRA LimitedAn Associate of Moody’s Investor Services

A symbolic indicator of the current opinion of the relative capability of the issuer to service its debt obligation in a timely manner, with specific reference to the instrument being rated

Measures probability of default

Based on quantitative and qualitative analysis

Typical rating criteria includes economy risk, sector risk, enterprise risk (example market position, operation efficiencies, project risk, financial risk and management risk)

Rating is not an audit

.

Credit Rating Overview

June 2013ICRA LimitedAn Associate of Moody’s Investor Services

Simple, objective indicator of risk

Risk premium assessment for pricing of issues

Portfolio monitoring and secondary selling

Related risk assessments

Credit research report

Access to information better than that of most lenders

Access to top management strategy and intent

Compliance with regulatory requirements

Credit Ratings… for investors

Credit ratings help in making an

informed lending decision and

can be used to supplement the

internal assessment process

June 2013ICRA LimitedAn Associate of Moody’s Investor Services

For Debt Issuers

Wider access to capital – domestic and global

More stable access to capital

Reduced borrowing costs

Efficient net issuances

Financial flexibility

For Financial intermediaries

Planning, pricing & placement of securities

Monitoring of portfolio on behalf of clients

Rating benefits for regulators

Screening issues

Enhancing market transparency

Credit Rating.. an enabler

Credit ratings help in creating a more

efficient market for debt instruments

Credit ratings aid in accessing funds at

lower costs

Credit ratings facilitate the monitoring

process

June 2013ICRA LimitedAn Associate of Moody’s Investor Services

Capital adequacy requirement

Basel 2 compliance

Internal process validation / Supplement

Instrument pricing

Banks

Portfolio analysis

Commercial Paper / Debentures

Access different sources for raising debt

(banks, institutional funding etc )

Interest rates

Performance analysis vis-à-vis competition

Mutual Funds

Corporates / Issuers

Illustrations

Applications of Credit Rating

June 2013ICRA LimitedAn Associate of Moody’s Investor Services

Provide stable and easily accessible ratings

Enhance market confidence through due diligence and analytical rigor

Enable secondary market development

Reduce Uncertainty and Information asymmetry

Timely and periodic updating of changes in credit quality

Quantification of Risk

Create Wider investment opportunity

Consolidate fragmented credit decision making

Improve disclosure practices

Credit Ratings and CRAs are often used as a catalyst for the development of sound fixed capital and

financial markets, but should not be construed as a substitute for regulation or regulatory compliance

Role of Credit Rating Agencies

June 2013ICRA LimitedAn Associate of Moody’s Investor Services

Group ICRA

June 2013ICRA LimitedAn Associate of Moody’s Investor Services

ICRA commenced rating services in 1991

Services Offered

Credit Ratings

Grading Services

Covers all major Sectors

Manufacturing companies covering the entire gamut of Indian industry Oil & Gas, Power, Telecom, Textiles,

Steel, Cement, Pharmaceuticals, Paper, Fertilizer, Auto and auto ancillaries, Chemicals, Sugar, Tea, Paper,

Hotel, Construction , Real Estate, Gems & Jewellery etc.

Financial sector covering banks, financial institutions, Insurance, NBFC, primary dealers, housing finance

companies, brokerage houses etc

Project Finance including infrastructure

Structured finance including asset backed securities (Auto, CV), Mortgage backed securities (Housing loans -

fixed and floating rate), Collateralised debt obligation, Partial guarantee, Future flow transaction etc

ICRA covers 7000+ companies in various sectors such as entire manufacturing, financial, project finance including

infrastructure and structured finance

.

ICRA Overview

June 2013ICRA LimitedAn Associate of Moody’s Investor Services

Associate of Moody’s Investor Services, a leading source for credit ratings, research and risk analysis in the world

Independent and unbiased opinion

Established relationships with a large network of corporates and financial institutions

Access to top management of industry stakeholders

In-depth sectoral knowledge

Over two decades of experience having witnessed multiple business cycles

Sector specific research and analysis

.

ICRA Advantage

Rating and Grading Services

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June 2013ICRA LimitedAn Associate of Moody’s Investor Services

Thank you