Escolar Documentos
Profissional Documentos
Cultura Documentos
03/29/13
CREDIT RATING
A credit rating assesses the credit worthiness of an individual, corporation, or even a country. It tells a lender or investor the probability of the subject being able to pay back a loan. Credit ratings are calculated from financial history and current assets and liabilities. The ratings are expressed in code numbers which can be easily comprehended by the lay investors. A poor credit rating indicates a high risk of defaulting on a loan, and thus leads to high interest rates. Credit rating, as exists in India, is done for a specific security and not for a company as a whole. A debt rating is not one time evaluation of credit risk, which can be regarded as valid for the entire life of the security.
03/29/13 2
The main objective is to provide superior and low cost information to investors for taking a decision regarding riskreturn trade off, but it also helps to market participants in the following ways; Improves a healthy discipline on borrowers, Lends greater credence to financial and other representations, Facilitates formulation of public guidelines on institutional investment, Helps merchant bankers, brokers, regulatory authorities, etc., in discharging their functions related to debt issues, Encourages greater information disclosure, better accounting standards, and improved financial information (helps in investors protection), May reduce interest costs for highly rated companies, Acts as a marketing tool
03/29/13 4
03/29/13
03/29/13
03/29/13
Foreign BanksSC Bank, Banque Indo-Suez, Mitsui bank, Bank of Tokyo, Hongkong Bank,
Citi Bank, Grindlays Bank, Deutsche Bank, SOciete General Banque, Nationale de Paris.
03/29/13
10
4. Innovation
Our dedicated Centres of Excellence provide thought leadership. The core teams lead the way by developing and sharing insights from the extensive corpus available, building innovative analytical frameworks and developing new methodologies and products in line with requirements of the market place. 5. Commitment - We are committed to Setting standards for integrity, analytical rigour and best practices in the marketplace Consistently providing value to constituents through analytically relevant and reliable opinions and solutions Upholding independent evaluation processes and a non-partisan, unbiased and fearless approach to functioning
03/29/13 14
03/29/13
15
1. Business Analysis, 2. Financial Analysis, 3. Management evaluation, 4. Regulatory and competitive environment, and 5. Fundamental analysis.
Factors listed above at serial numbers 1, 2, and 3 are evaluated for manufacturing companies, while 4 and 5 factors are used to evaluate finance companies apart from the 1, 2 and 3 factors.
03/29/13 18
OBJECTIVES OF ICRA
To access the credit instrument and award it a grade consonant to the risk associated with such instrument. - To assist investors in making well informed investment decision - To assist issuers in raising funds from a wider investors base - To enable banks, investment bankers and brokers in placing debt with investors by providing them with a marketing tool - To provide regulators with a market driven system to encourage the healthy growth of the capital markets in a disciplined manner without costing an additional burden on the Government for this purpose. 03/29/13 21
STRATEGIES OF ICRA
Create awareness of the rating concept and benefits among issuers, investors, regulators, and financial institutions. - Win the credibility, confidence and trust of the constituents by demonstrating that its methodology is transparent and its ratings are independent and consistent. - Aggressively focus on business development whitish would result in a significant increase in the volume of rating assignments and spur the Govt. into introducing an exclusively market-driven interest rate structure.
03/29/13 22
- With the growth and globalisation of the Indian capital markets leading to an exponential surge in demand for professional credit risk analysis, ICRA has been proactive in widening its service offerings, executing assignments including credit ratings, equity gradings, specialised performance gradings and mandated studies spanning diverse industrial sectors. - In addition to being a leading credit rating agency with expertise in virtually every sector of the Indian economy, ICRA has broadbased its services for the corporate and financial sectors, both in India and overseas, and currently offers its services under the following banners: Rating Services Information. Grading and Research Services. Advisory Services. Economic Research Outsourcing.
03/29/13 23
: Highest Safety High Safety Adequate Safety : Moderate Safety Inadequate Safety Risk prone Substantial Risk Default, Extremely speculative
24
25
03/29/13
28
1. Advisory Services: Credit Reports - CARE offers credit reports on companies based on published information and CARE's in-house data base. These confidential credit reports are useful to entities considering financing options, joint ventures, acquisitions and collaborations with Indian companies. Sector Studies - CARE from time to time conducts studies on select sectors of the Indian economy, particularly those which were largely government controlled and funded till recently, but have been thrown open for private investment. Studies on the Indian Power Sector, Fertilizer Industry and Municipal Finances have been completed. CARE has also prepared reports on twelve of the larger states of the Indian Union, which account for the bulk of foreign direct investment into India. CARE also regularly prepares reports on important segments of the Indian economy. These reports are used by industry participants, financial intermediaries and also by analysts in CARE for their rating reports.
03/29/13 29
03/29/13
30
2. Credit 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 (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 deposits). - 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.
03/29/13 32
contd.
: Highest Safety : High Safety : Adequate Safety : Inadequate Safety : High Risk : Highest Safety : High Safety : Adequate Safety : Inadequate Safety : High Risk
33
CARE
Short term debt instruments Rating Symbols PR 1: Superior capacity PR 2: Strong capacity PR 3: Adequate capacity PR 4: Minimal degree of safety PR 5: Default or likely in default on maturity .Credit Analysis Rating CARE 1: Excellent Debt Management Capacity CARE 2: Very good Debt Management Capability CARE 3: Good capability for Debt Management CARE 4: Barely satisfactory capability for debt management CARE 5: Poor capability for debt management
03/29/13 34
contd. 3. Other Rating / Grading Services : IPO Grading - CARE's IPO grading is a service aimed at facilitating the assessment of equity issues offered to public. - CARE's IPO grading is an independent and professional opinion on the fundamentals of the issuer. - The grade assigned to any individual issue represents a relative assessment of the 'fundamentals' of that issuer. Utility to market participants - CAREs IPO grading would help the investors particularly the retail
investors better appreciate the meaning of the disclosures in the issue document to the extent that they affect its fundamentals. IPO grading is expected to be one of the inputs in the investors decision making process. - Moreover, such a service would be particularly useful for assessing the offerings of companies accessing the equity markets for the first time where there is no track record of their market performance. Issuers would also benefit from CARE's IPO grading as it would help them in benchmarking themselves in the market place.
03/29/13 35
03/29/13
36
Interacts with the grading team, responds to 3. The grading team interacts with clients, undertakes site queries raised and provides any additional data visits, and analyses data submitted by the client. 4. Internal committee previews analysis. 5. GRADING COMMITTEE awards grading to IPO Accepts * Client grading may ask * for a review of the grading assigned 6. Notification and furnish in press additional information for the purpose. However, clients do not have the option of not accepting the final grading
03/29/13 37
03/29/13
38
03/29/13
39
In India there has been a absence of rating agency for individuals. ONICRA has filled this gap and it is the Indias first individual credit rating system. It brings to India the internationally established concept of providing credit rating of individuals, for the use of lending institutions. Rating of Individuals: ONICRA credit rating systems is based on the sophisticated software developed in collaboration with James Martin & Co, that has provided to ONICRA the most comprehensive methodology that addresses the needs of a mega credit rating system ONICRA takes up credit rating for individuals customer at the request of a lending firm/institution. In the process customer is required to fill the form given by ONICRA. Benefit of Rating: It is beneficial to lenders because it saves time, and helps in concentrating on core area of interest.
03/29/13 40
ONICRA