Credit Rating Agencies in India
Credit Rating Agencies in India
Credit Rating Agencies in India
CRISIL
TYPES OF RATINGS
Credit Ratings
A CRISIL rating reflects CRISIL's current opinion on the relative likelihood of timely payment
of interest and principal on the rated obligation. It is an unbiased, objective, and independent
opinion as to the issuer's capacity to meet its financial obligations. So far, CRISIL has rated
30,000 debt instruments, covering the entire debt market.
CRISIL Ratings' clientele includes all the industry majors - 23 of the BSE Sensex constituent
companies and 39 of the NSE Nifty constituent companies, accounting for 80 per cent of the
equity market capitalization , are CRISIL's clients.
CRISIL ratings are based on a robust and clearly articulated analytical framework, which ensures
comprehensiveness, standardisation, comparability, and effective communication of the ratings
assigned and of every timely rating action. The assessment is based on the highest standards of
independence and analytical rigour.
CRISIL Real Estate Star Ratings provide city specific all-round assessment of real estate projects
and help buyers benchmark and identify quality projects within their city. CRISIL Real Estate
Star Ratings address two critical needs in the realty sector: improved transparency and objective
benchmarking of projects.
Star Ratings is based on an eight-point scale that is specific to the city— from ‘City 7-Star’, the
highest, to ‘City 1-Star’, the lowest being 'Non-Deliverable Project'.
Services
Irevna's services complement the onshore financial research teams of some of the world's largest
financial institutions and insurance companies. Its associates possess research expertise in a
variety of asset classes. Irevna also provides comprehensive consulting and finance outsourcing
services with solutions customised to meet the needs of various clients. Furthermore, insurance
companies and consultants have benefited from Irevna's services based on the foundation of
reduced costs and value-added analysis.
Equity Research Irevna provides a full spectrum of equity research services, from searching
and aggregating data to building models, generating ideas for onshore analysts and writing in-
depth reports. Irevna pioneered outsourced equity research and analytics in 2001 and retains this
vanguard position with over 50 of the world's leading buy- and sell-side financial institutions as
clients.
Credit Research Irevna provides valuable credit research and credit sourcing services to its
clients with capabilities across industries, lending types and geographies. Irevna has closely
worked with financial institutions such as banks, thrifts, asset management firms, private equity
firms and insurance companies. The credit research services offered include:
Credit Sourcing
Economic/Sector Assessments
Financial Modeling
Credit Risk Assessments
Legal Due Diligence
Credit Risk Monitoring
Portfolio Monitoring
Retail Brokerage Research Irevna's retail research services include end-to-end stock initiation
reports, financial performance projections, publishing (industry, market and thematic) research
reports, conducting comprehensive fundamental credit research, performing sovereign and
economics research, drafting mutual/hedge fund performance reports, and creating newsletters,
periodicals, and marketing presentations.
FX and Economics In order to negotiate and work within the highly volatile FX markets clients
require partners who have a deep understanding of macroeconomics and that's where Irevna
offers its full support. Irevna is highly skilled in creating quantitative models for FX forecasting,
back testing and new product development. It also supports traders with trade book migration, IT
and application support for algorithmic trading projects, and structured trade reviews of exotic
fixed-income derivatives trades.
Private Wealth Management In the current market scenario, providers of private wealth
management offshoring services with specialised industry expertise and exposure to multiple
asset classes have a critical role to play. Irevna's experience in diverse domains of financial
outsourcing such as equity, fixed income, derivatives and risk management helps provide
customised services to private wealth management firms.
Retail Risk Analytics Irevna's risk analytics team, has experience in building empirical models
(scorecards), strategies and performing data-driven analyses in the risk domain for consumer
banking/finance businesses, across various stages of the consumer's credit life cycle - Product
Planning, Credit Acquisition, Account Maintenance, Collections, and Account-Write-Offs.
RATING SYMBOLS
AAA Instruments rated 'AAA' are judged to offer the highest degree of
(Triple A) safety, with regard to timely payment of financial obligations. Any
Highest Safety adverse changes in circumstances are most unlikely to affect the
payments on the instrument.
AA Instruments rated 'AA' are judged to offer a high degree of safety,
(Double A) with regard to timely payment of financial obligations. They differ
High Safety only marginally in safety from 'AAA' issues.
A Instruments rated 'A' are judged to offer an adequate degree of
Adequate Safety safety, with regard to timely payment of financial obligations.
However, changes in circumstances can adversely affect such issues
more than those in the higher rating categories.
BBB Instruments rated 'BBB' are judged to offer moderate safety, with
(Triple B) regard to timely payment of financial obligations for the present;
Moderate Safety however, changing circumstances are more likely to lead to a
weakened capacity to pay interest and repay principal than for
instruments in higher rating categories.
BB Instruments rated 'BB' are judged to carry inadequate safety, with
(Double B) regard to timely payment of financial obligations; they are less likely
Inadequate Safety to default in the immediate future than instruments in lower rating
categories, but an adverse change in circumstances could lead to
inadequate capacity to make payment on financial obligations.
B Instruments rated 'B' are judged to have high likelihood of default;
High Risk while currently financial obligations are met, adverse business or
economic conditions would lead to lack of ability or willingness to
pay interest or principal.
C Instruments rated 'C' are judged to have factors present that make
Substantial Risk them vulnerable to default; timely payment of financial obligations is
possible only if favourable circumstances continue.
D Instruments rated 'D' are in default or are expected to default on
Default scheduled payment dates.
NM Instruments rated 'NM' have factors present in them, which render
Not Meaningful the outstanding rating meaningless. These include reorganisation or
liquidation of the issuer, the obligation being under dispute in a court
of law or before a statutory authority.
IMPORTANT: 1) CRISIL may apply '+' (plus) or '-' (minus) signs for ratings
from 'AA' to 'C' to reflect comparative standing within the
category.
2) CRISIL may assign rating outlooks for ratings from 'AAA'
to 'B'. Ratings on Rating Watch will not carry outlooks. A
rating outlook indicates the direction in which a rating may
move over a medium-term horizon of one to two years. A
rating outlook can be 'Positive', 'Stable', or 'Negative'. A
'Positive' or 'Negative' rating outlook is not necessarily a
precursor of a rating change.
ICRA Limited (formerly Investment Information and Credit Rating Agency of India Limited)
was set up in 1991 by leading financial/investment institutions, commercial banks and financial
services companies as an independent and professional Investment Information and Credit
Rating Agency. Today, ICRA and its subsidiaries together form the ICRA Group of Companies
(Group ICRA). ICRA is a Public Limited Company, with its shares listed on the Bombay Stock
Exchange and the National Stock Exchange.
Range of Services
Rating Services
As an early entrant in the Credit Rating business, ICRA Limited (ICRA) is one of the most
experienced Credit Rating Agencies in the country today. ICRA rates rupee denominated debt
instruments issued by manufacturing companies, commercial banks, non-banking finance
companies, financial institutions, public sector undertakings and municipalities, among others.
ICRA also rates structured obligations and sector-specific debt obligations such as instruments
issued by Power, Telecom and Infrastructure companies. The other services offered include
Corporate Governance Rating, Stakeholder Value and Governance Rating, Credit Risk Rating of
Debt Mutual Funds, Rating of Claims Paying Ability of Insurance Companies, Project Finance
Rating, and Line of Credit Rating.
Grading Services
The Grading Services offered by ICRA employ pioneering concepts and methodologies, and
include Grading of: Initial Public Offers (IPOs); Microfinance Institutions (MFIs); Construction
Entities; Real Estate Developers and Projects; Healthcare Entities; and Maritime Training
Institutes. In IPO Grading, an ICRA-assigned IPO Grade represents a relative assessment of the
“fundamentals” of the issue graded in relation to the universe of other listed equity securities in
India. In MFI Grading, the focus of ICRA’s grading exercise is on evaluating the candidate
institution’s business and financial risks. The Grading of Construction Entities seeks to provide
an independent opinion on the quality of performance of the entities graded. Similarly, the
Grading of Real Estate Developers and Projects seeks to make property buyers aware of the risks
associated with real estate projects, and with the developers’ ability to deliver in accordance with
the terms agreed. ICRA’s Healthcare Gradings present an independent opinion on the quality of
care provided by healthcare entities. In the education sector, ICRA offers the innovative service
of Grading of Maritime Training Institutes in India.
Consulting Services
RATING SYMBOLS
LAAA The highest-credit-quality rating assigned by ICRA. The rated instrument carries the
lowest credit risk
LAA The high-credit-quality rating assigned by ICRA. The rated instrument carries low credit
risk.
LA The adequate-credit-quality rating assigned by ICRA. The rated instrument carries average
credit risk.
LBBB The moderate-credit-quality rating assigned by ICRA. The rated instrument carries higher
than average credit risk.
LBB The inadequate-credit-quality rating assigned by ICRA. The rated instrument carries high
credit risk.
LB The risk-prone-credit-quality rating assigned by ICRA. . The rated instrument carries very
high credit risk.
LC The poor-credit-quality rating assigned by ICRA. The rated instrument has limited prospects
of recovery.
LD The lowest-credit-quality rating assigned by ICRA. The rated instrument has very low
prospects of recovery.
ICRA’s Medium-Term Rating Scale (only for Public Deposits)
MAAA The highest-credit-quality rating assigned by ICRA. The rated deposits programme
carries the lowest credit risk
MAA The high-credit-quality rating assigned by ICRA. The rated deposits programme carries
low credit risk.
MA The adequate-credit-quality rating assigned by ICRA. The rated deposits programme carries
average credit risk.
MB The inadequate-credit-quality rating assigned by ICRA. The rated deposits programme
carries high credit risk.
MC The risk-prone-credit-quality rating assigned by ICRA. The rated deposits programme
carries very high credit risk.
MD The lowest-credit-quality rating assigned by ICRA. The rated instrument has very low
prospects of recovery.
Special Symbols
* Rating withdrawn
# Under rating watch
@ Under rating watch with negative
implications
& Under rating watch with developing
implications
% Under rating watch with positive
implications
^ Rating Suspended
fc Compulsorily Fully Convertible
Bonds/Debentures
SO Structured Obligation
S Supported by Stand by/Letter of Support
(P) The Letter 'P' in parenthesis after the
rating symbol indicates that the debt
instrument is being issued to raise
resources by a new company for financing
a new project and the rating assumes
successful completion of the project
! Conditional Rating
CARE(Credit Analysis and REsearch Ltd.)
Credit Analysis & Research Ltd. (CARE Ratings) is a full service rating company that offers a
wide range of rating and grading services across sectors. CARE has an unparallel depth of
expertise. CARE Ratings methodologies are in line with the best international practices. CARE
Ratings has completed over 8488 rating assignments having aggregate value of about Rs.26609
bn (as at Sep 30, 2010), since its inception in April 1993. CARE is recognised by Securities and
Exchange Board of India (Sebi), Government of India (GoI) and Reserve Bank of India (RBI)
etc.
RATING SERVICES
CARE's Credit Rating is an opinion on the relative ability and willingness of an issuer to make
timely payments on specific debt or related obligations over the life of the instrument. CARE
rates rupee denominated debt of Indian companies and Indian subsidiaries of multinational
companies.
CARE undertakes credit rating of all types of debt and related obligations. These include all
types of medium and long term debt securities such as debentures, bonds and convertible bonds
and all types of short term debt and deposit obligations such as commercial paper, inter-
corporate deposits, fixed deposits and certificates of deposit.
CARE also rates quasi-debt obligations such as the ability of insurance companies to meet
policyholders’ obligations. CARE's preference share ratings measure the relative ability of a
company to meet its dividend and redemption commitments.
CARE has a strong structured finance team and has been instrumental in developing rating
methodologies for innovative asset backed securities in the Indian capital market. The term
'structured financing' refers to securities where the servicing of debt and related obligations is
backed by some sort of financial assets and/ or credit support from a third party to the
transaction.
CARE’s credit ratings consider a medium to long term horizon which is typically defined as
three to five years. While the time horizon of a short term instrument is up to one year.
ONICRA(
Onicra Credit Rating Agency is an active player in the Credit and Performance Assessment
space. It provides scoring and rating services to Individuals, Corporates and MSMEs. These
ratings enable the lender or service provider to make smart, value based decisions on the
individuals, corporates or the MSME by arming them with essential information that includes
financial, operational, productivity and 3-Dimensional analysis that provides a holistic view
about the entity.
TYPES OF RATINGS
EDUCATION RATING
A well-developed and organized education sector is crucial for bringing socio-economic
transformation in the country. We provide an assessment, rating and grading model for
educational institutions that complies with government laid down regulations. Through the rating
report, institutions can reassess their areas of expertise and aim towards identifying, validating
and improving the quality and standard of education. We have experience in conducting SWOT
and Training Needs Analysis (TNA) for engineering colleges to apply for TEQIP-II funds.
(A World Bank and Ministry of HRD initiative)
Onicra is a National Skills Registry (NSR) empanelled Background Screening Company . Our
services provide comprehensive results that help employers reduce workplace violence , theft ,
substance abuse and negligent hiring abilities . Details such as employment history , educational
qualifications and several other personal and behavioral information are captured . We fully
understand the complexity and criticality that employers face to select the right candidate. We
give you the insight you need to uncover unknown facts quickly . Our employee background
screening services are provided to international and national companies in the IT/ITES,
Hospitality, FMCG, Telecom and Financial sectors. The success of any organization depends on
its employees.The success rate of companies is high where there is a mutual trust between the
employer and the employee. Employee Background Screening is a way to develop that mutual
trust.
VENDOR RATING
Onicra’s vendor ratings provide insight, analysis and advice on the key indicators of a vendor’s
overall status such as strategy, organization goals, products, marketing and financials. Vendors
are given standing, according to their attainment of some level of performance, such as delivery,
lead time, quality, price and credit standing.
RATING FRAMEWORK
The basic methodology followed to formulate and plan the mathematical model for rating is
consistent across individuals and corporates. It follows a five step process.
• The first step is the definition of the objective- which is the entity that needs to be rated.
• This is followed by collation of all the high level parameters that affect the entity. This
high level parameter collation is done using a mix of market analysis, in-house expertise,
primary and secondary research.
• Once the parameters are identified, Onicra follows a top-down approach of parameter
decomposition. This simply entails decomposing the parameters into the sub-parameters
upon which they are dependent at several levels, until we reach independent and
quantifiable parameters.
• These parameters are input into a mathematical model and analyzed to ensure that the
results are in line with actual behavior.
• Simultaneously, the organization’s research groups are constantly monitoring and
keeping checks on various other parameters, both environmental and economic to keep
the model being worked on, relevant, fresh and up-to-date with the fast changing
financial and economic scene.
Standard & Poor’s is a leading provider of financial market intelligence. The world’s
foremost source of credit ratings, indices, investment research, risk evaluation and data,
Standard & Poor’s provides financial decision-makers with the intelligence they need to
feel confident about their decisions.
Ratings Services continues to utilize a global ratings scale and traditional rating symbols.
Ratings Services has not adopted separate ratings or identifiers for ratings of structured
finance products. In our view, the use of separate rating symbols or identifiers for
structured finance products ratings would not provide any additional information about
the meaning and limitations of ratings. Ratings Services believes that the capital markets
are better served by initiatives to enhance the rating process and increase transparency
about the rating process. In addition, adopting separate ratings or identifiers for structured
finance product ratings may have the unintended consequence of imposing substantial
administrative burdens and operational difficulties on, and increasing the costs for,
market participants. Finally, in response to a request for comment conducted by Ratings
Services this year, a substantial majority of the respondents were against a proposal to
adopt a subscript or identifier for structured finance product ratings.
Long-term issuer credit ratings
AAA: An obligor rated 'AAA' has extremely strong capacity to meet its financial
commitments. 'AAA' is the highest issuer credit rating assigned by Standard & Poor's.
AA: An obligor rated 'AA' has very strong capacity to meet its financial commitments. It
differs from the highest-rated obligors only to a small degree.
A: An obligor rated 'A' has strong capacity to meet its financial commitments but is
somewhat more susceptible to the adverse effects of changes in circumstances and
economic conditions than obligors in higher-rated categories.
BBB: An obligor rated 'BBB' has adequate capacity to meet its financial commitments.
BB, B, CCC, and CC: Obligors rated 'BB', 'B', 'CCC', and 'CC' are regarded as having
significant speculative characteristics. 'BB' indicates the least degree of speculation and
'CC' the highest. While such obligors will likely have some quality and protective
characteristics, these may be outweighed by large uncertainties or major exposures
to adverse conditions.
BB: An obligor rated 'BB' is less vulnerable in the near term than other lower-rated
obligors. However, it faces major
ongoing uncertainties and exposure to adverse business, financial, or economic
conditions, which could lead to the obligor's inadequate capacity to meet its financial
commitments.
B: An obligor rated 'B' is more vulnerable than the obligors rated 'BB', but the obligor
currently has the capacity to meet its financial commitments. Adverse business, financial,
or economic conditions will likely impair the obligor's capacity or willingness to meet its
financial commitments.
CCC: An obligor rated 'CCC' is currently vulnerable, and is dependent upon favorable
business, financial, and economic conditions to meet its financial commitments.
CC: An obligor rated 'CC' is currently highly vulnerable.
R: An obligor rated 'R' is under regulatory supervision owing to its financial condition.
During the pendency of the regulatory supervision, the regulators may have the power to
favor one class of obligations over others or pay some obligations and not others. Please
see Standard & Poor's issue credit ratings for a more detailed description of the effects of
regulatory supervision on specific issues or classes of obligations.
SD and D: An obligor rated 'SD' (selective default) or 'D' has failed to pay one or more of
its financial obligations (rated or unrated) when it came due. A 'D' rating is assigned
when Standard & Poor's believes that the default will be a general default and that the
obligor will fail to pay all or substantially all of its obligations as they come due.
An 'SD' rating is assigned when Standard & Poor's believes that the obligor has
selectively defaulted on a specific issue or class of obligations but it will continue to meet
its payment obligations on other issues or classes of obligations in a timely manner. A
selective default includes the completion of a distressed exchange offer, whereby
one or more financial obligation is either repurchased for an amount of cash or replaced
by other instruments
MOODY’S
Moody's is an essential component of the global capital markets, providing credit ratings,
research, tools and analysis that contribute to transparent and integrated financial
markets. Moody's Corporation (NYSE: MCO) is the parent company of Moody's
Investors Service, which provides credit ratings and research covering debt instruments
and securities, and Moody's Analytics, which offers leading-edge software, advisory
services and research for credit analysis, economic research and financial risk
management. The Corporation, which reported revenue of $2 billion in 2010, employs
approximately 4,500 people worldwide and maintains a presence in 26 countries.
Services
All ratings completed by MARC are kept under continuous surveillance. The ratings are
formally reviewed at least once a year. Due to positive or adverse developments, ratings
may be placed on MARCWatch for upgrading, affirmation or downgrading.
Assess the likelihood of timely repayment of principal and payment of interest over the term
to maturity of such debts.
Issuer Ratings
Are applied to a company's debt securities provided they are homogeneous, senior debt or
where debts rank pari passu, under a scenario whereby the company may be intending to issue
multiple debts within a short time frame.[
Assess the likelihood of timely repayment of the instruments issued under the various Islamic
financing contract(s).
Asset-Backed Securities (ABS)
Assess the likelihood of timely repayment of principal and payment of interest on debt
securities issued by a corporate, usually a single purpose vehicle, against stable income-
generating assets, e.g. hire purchase receivables, toll collections, rental income, etc.
Assess the creditworthiness of financial institutions, i.e. commercial and investment banks,
finance companies and discount houses.
Are a measure of a corporate's intrinsic ability and overall capacity for timely repayment of its
financial obligations. These are voluntary ratings that may be sought by companies to enhance
corporate governance and transparency.
Essentially assess the financial security characteristics of an insurance company on its ability to
meet its policyholder obligations in accordance with the terms of their insurance contracts.
Assess the corporate governance of an Islamic Financial Institution (IFI). IFI governance
ratings are an assessment of how the IFI promotes sound governance transparency and
accountability and institutional capacity-building for improved governance.
Sovereign Issuer Credit Ratings
FITCH
Fitch Solutions, a division of the Fitch Group, focuses on the development of fixed-
income products and services bringing to market a wide range of data, analytical tools
and related services, and is the distribution channel for Fitch Ratings content. Fitch
Solutions products and services provide market participants with greater insight into the
growing complexity of the credit markets to enable more timely and informed business
decisions.
SERVICES
Research Services Credit research, ratings and analytical tools offered via an online
platform and as a data feed.
Structured Finance Solutions Surveillance, performance data, models and analytics for
structured finance portfolio management.
Risk & Performance Analytics Ratings, implied ratings, and company financials
distributed via single and integrated data feeds and an analytical platform.
Pricing & Valuation Services Independent pricing and valuation data for structured
finance and fixed-income derivatives.
Training Credit and corporate finance training services for bankers, fixed income
professionals and regulators.
Quantitative Analytics Academic-quality research and analytics delivered by Fitch
Solutions quantitative analysts.
RATING SYMBOLS
ASSIGNMENT
ON
“CREDIT RATING AGENCIES”