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Credit rating is an indicator of the current opinion of the rating agency. It provides a relative ranking of the credit quality of debt / financial instrument. It is not recommended for buying, selling or holding security. It does not create any legal relationship between the rating agency and the investor.
Credit rating is an indicator of the current opinion of the rating agency. It provides a relative ranking of the credit quality of debt / financial instrument. It is not recommended for buying, selling or holding security. It does not create any legal relationship between the rating agency and the investor.
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Attribution Non-Commercial (BY-NC)
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Credit rating is an indicator of the current opinion of the rating agency. It provides a relative ranking of the credit quality of debt / financial instrument. It is not recommended for buying, selling or holding security. It does not create any legal relationship between the rating agency and the investor.
Drepturi de autor:
Attribution Non-Commercial (BY-NC)
Formate disponibile
Descărcați ca PPT, PDF, TXT sau citiți online pe Scribd
*It is an symbolic indicator of the current opinion of the rating
agency regarding relative ability and willingness of the issuer of a financial (debt) instrument to meet the (debt) service obligations as and when they arise.
*It provides a relative ranking of the credit quality of
debt/financial instrument or their grading according to investment quality.
*It provides a simple system of gradation by which the relative
capacities of companies(borrowers)to make timely repayment of interest and principle on a particular type of debt/financial instrument can be noted. Features of credit rating
*It is with respect to particular instrument issued by company.
*It is not recommended for buying, selling or holding security. *It uses various of information. *It does not create any legal relationship between the rating agency and the investor. *It should be reviewed and upgraded . Is it obligatory?
*Not obligatory for equity shares
*It is obligatory for following debt instruments- -convertible/nonconvertible debentures/bonds irrespective of period of maturity or redemption -fixed deposits issued by NBFC -commercial paper
New SEBI guidelines-
-if size of issue is more than 100 crores, the issue i.e required to be rated by at least two rating agencies Who can do? *credit rating and information service on India Ltd(CRISIL)) *investment information and credit rating agency(ICRA) *Credit analysis and Research Ltd (CARE) *FITCH Rating India Private Ltd Advantages *provides the investor with the reliable and superior information from an independent and professional source about the company. *it is easy for co to market the instrument at less cost. *motivation to the co to improve their performance. *the investible funds of the investors are directed towards more productive investment portfolios. Rating Process Steps followed *new issue instruments-rating agreement, meeting with management ,rating committee, communication *review of rating-possible change, new data, credit rating watch *flow chart of rating-new issue rating/review of existing rating Methodology…..
Crisil considers following aspects
(a)Business Analysis consists of- *industry risk *market position *operating efficiency *legal position (b).Financial analysis *accounting quality *earnings prospects *adequacy of cash flows *financial flexibility *interest & tax sensitivity (c ) Management evaluation *track record of management *evaluation of capacity to overcome adverse situation *goals, philosophy & strategies
(d) Fundamental analysis
*capital adequacy *resources *asset quality *liquidity management *profitability & financial position *interest & tax sensitivity Limitations of Credit Rating *subjective valuation *guidelines do not require the co to publish these ratings *promoted by government organization having own consequences *primarily based upon past performance *multiplicity of rating agencies *up- gradation of rating within in a short period of time