PROJECT ON CREDIT RATING OF DEBT INSTRUMENTS

SHRADDHA J. SHETH SEAT NO. 797 (SEVEN HUNDRED NINETY SEVEN)

SUBMITTED TO THE UNIVERSITY OF MUMBAI IN PARTIAL REQUIREMENT LEADING TO A DEGREE IN BACHELOR OF FINANCIAL MARKET

PROJECT GUIDE Prof. H. J. SHARMA

S. K. SOMAIYA COLLEGE OF ARTS, SCIENCE AND COMMERCE VIDYAVIHAR, MUMBAI- 400 077. (2010 2011)

ii

PREFACE
This project has been made as a part of T. Y. BFM SEM (VI) 2010-2011. And this is a brief project report on CREDIT RATING OF DEBT INSTRUMENTS.

iii

ACKNOWLEDGEMENT
Project like these are not possible without guidance and support from people with vast knowledge and varied experience. I would like to thank Prof. H. J. Sharma (project guide) Mrs.Sangeeta mam (Principal) and Dr. M. Deshmukh (BFM coordinator) for giving me opportunity to undertake this study. I have tried my best to collect all the possible information pertaining to the topic to make it a complete one. This completion would not have been possible without the kind support of professors, staff members and clerks during the course of project I would also like to thank college library to provide all relevant books which helped me to complete my project successfully. I also extend my word of thanks to everyone who has helped me with his / her knowledge inputs and constant support. This project will be a memory to cherish academically as well as emotionally due to all of them.

iv

CONTENTS
PAGE NO.

1. CERTIFICATE.........ii 2. PREFACE........iii 3. ACKNOWLEDGEMENT...........iv 4. EXECUTIVE SUMMARY.........vi 5. INTRODUCTION TO DEBT MARKET....1 6. CREDIT RATING AGENCIES......7 7. DEBT INSTRUMENTS....15 8. INSTRUMENTS...19 9. CRITICISM. .....30

10.CONCLUSION.....33 11. REFERENCES....34

EXECUTIVE SUMMARY
Credit rating of any company financial instrument is very necessary for the critical analysis of the company returns that an investor will derive. So credit rating of any instrument of any company needs to evaluate thoroughly before investing in it. Debt market plays an important role in the overall development of the countrys economy and so the debt instruments should be highly credible for investors as well as the company. The main purpose of this project was to make a detailed study about credit rating of the debt instruments and its rating mechanism adopted by the credit rating agencies in India. The research done in the following is brief detail about; Detailed explanation of the debt market Types of debt instruments rated Credit rating agencies rating such instruments and their methodology, and finally

The information for this project is collected from various resources mentioned at the end of the project. And finally this project report is important because; This project will provide valuable insight into the topic Practical know- how of the rating activities
vi

And this will help anyone including me for betterment of knowledge and skills and also equip others with good future in finance

The brief details are furnished further.

vii