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An assessment of the credit worthiness of

individuals and corporations. It is based upon

the history of borrowing and repayment, aswell as the availability of assets and extent of

liabilities.

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Grade summarizing the willingness & ability

to pay

Ability to pay Quantitative

Willingness to pay Qualitative

Credit Rating is NOT A judgment or Statement regarding any

aspect of public policy

A political statement in favor or against a

particular person or administration

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Increase Investors acceptance

Current Economic environment

Current Capital Market environment

Bottom Line : Lower Interest Cost when theco. gets good credit rating

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Commercial Banks

Mutual Funds

Investment Banks

Leasing Companies

Insurance Companies

Bonds & Securitization

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Sovereign Ratings: Assess the country credit risk

and is used as a point of reference for country

borrowings from WB, IMF, ADB etc.

Entity Ratings: Risk ratings of Corporate Entities

Instrument Ratings: Ratings of Bonds issued by

different corporations and MNCs

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Company: A.M. Best: Moody's: S&P: Fitch:

AIG A A1 A+ AA-

Allianz A - AA -

American General A A1 A+ A-American National A - AA- AA-

Aviva A - AA- -

Axa Equitable A+ Aa3 AA AA-

EquiTrust B+ - - -

Fidelity A- - A+ BBB-

Genworth Financial A Baa3 BBB A-

Hartford A A3 A A-

ING A A2 A+ A

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1. Decision & Doc ments

2. Rating Presentations: meetings,

conference calls &/or site visits

3. Rating committee, comm nication,press release, reports

4. Appeal Process, if necessary

5. S rveillance

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Credit Ratings

Methodology

Business

Risk Profile

Analysis

Financial

Risk Profile

Analysis

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Business

Risk

Country

Risk

Company

Position

Industry

FactorsProfitability/ Peer GroupComparisons

Political Economic

Industry Specific factors Foreign exchange

Industry Trends Industry Structure

Market Size

Growth Potential

Cyclicality Bases of Competition

Changing Technology Operating Risk

Regulatory Environment

Competitive Factors Market position

Keys to Success Size

Diversification Management

Validation of Company

Position Trends Peer Group Comparisons

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Financial

Risk

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 withprofitability

Cash flow measures / ratios

Operating sources & usesOf liquidity

Other potential calls on

Liquidity Debt Characteristics

Bank credit facilities

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Risk Profile Minimal Moderate Intermediate Aggressive ighlyLeveraged

Excellent AAA AA A BBB BB

Strong AA A A- BBB- BB-

Satisfactory A BBB+ BBB BB+ B+

Weak BBB BBB- BB+ BB- B

Vulnerable BB B+ B+ B B-

#The matrix does not apply to the lowest rungs of credit spectrum i.e. CCC category andbelow

Note: The above grid is only an indicative framework to guide an Analyst in determining the

rating.

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