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Slide 3
Meaning and Definition
• A Credit Rating issued by a credit rating agency is an assessment
of the credit worthiness of individual financial securities (For
example, a bond) and debt issued by corporations, government
issued securities or even a country’s ability to repay debt.
• Credit Ratings are assigned by rating agencies to companies and
debt instruments, are designed to gauge the likelihood that a
company will default on its obligations to creditors. Thus, they
give investors a rough idea of the risk associated with loaning
money to the entity being rated.
• Credit ratings are forward-looking opinions about credit risk. It
express the agency’s opinion about the ability and willingness of
an issuer, such as a corporation or state or city government, to
meet its financial obligations in full and on time.
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