Credit Rating

By Suresh Sachdeva

This book provides a compact and precise description about credit ratings, which are harder to understand as laymen. after reading this book you will be an expert not only in what is credit rating but also about its various aspects.

• Language: English
• Publisher: Lulu.com
• Release date: Jan 27, 2018
• ISBN: 9781387550272

Book preview

Credit Rating

INTRODUCTION

Credit rating is a symbolic indicator of the current objective assessment of the relative capability and willingness of an issuer of a debt programmes to service the debt obligations as per the terms of the contract, given by some rating agency. It is only the current opinion of a borrowers’ credit quality in terms of business and financial risk. It may be defined as a symbolic indicator of the current opinion of the relative capability of the issuer to service its debt obligation in a timely fashion. In other words, it may be defined as the rating is an opinion on future ability and legal obligation of the issuer to make timely payments of principal and interest on a specific fixed income security. From the above it is clear that,

(a)   Rating is  a symbolic representation.

(b)   Rating indicates opinion of the rating agency.

(c)   Rating helps the investors in their decision-making of a particular avenue to invest.

(d)   Rating is opinion of rating agency about credit quality of the issuer of security or instrument.

Credit Rating Explained

Credit rating is a symbolic indicator of the current opinion of the relative capability of the issuer to service its debt obligation in a timely fashion. This means that rating presents an opinion by some authentic body about the issuer in terms of his/its future ability to make timely payment of the principal