ICRA Limited An Associate of Moodys Investor Services Credit Rating and Access to Institutional...
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Transcript of ICRA Limited An Associate of Moodys Investor Services Credit Rating and Access to Institutional...
ICRA LimitedAn Associate of Moody’s Investor Services
Credit Rating and Access to Institutional Credit
June 2013ICRA Limited
ICRA LimitedAn Associate of Moody’s Investor Services
1. Credit Rating Overview
2. Applications of Credit Rating
3. Role of Credit Rating Agencies
4. ICRA Overview
Agenda
June 2013
June 2013ICRA LimitedAn Associate of Moody’s Investor Services
A symbolic indicator of the current opinion of the relative capability of the issuer to service its debt obligation in a timely manner, with specific reference to the instrument being rated
Measures probability of default
Based on quantitative and qualitative analysis
Typical rating criteria includes economy risk, sector risk, enterprise risk (example market position, operation efficiencies, project risk, financial risk and management risk)
Rating is not an audit
.
Credit Rating Overview
June 2013ICRA LimitedAn Associate of Moody’s Investor Services
Simple, objective indicator of risk
Risk premium assessment for pricing of issues
Portfolio monitoring and secondary selling
Related risk assessments
Credit research report
Access to information better than that of most lenders
Access to top management strategy and intent
Compliance with regulatory requirements
Credit Ratings… for investors
Credit ratings help in making an
informed lending decision and
can be used to supplement the
internal assessment process
June 2013ICRA LimitedAn Associate of Moody’s Investor Services
For Debt Issuers
Wider access to capital – domestic and global
More stable access to capital
Reduced borrowing costs
Efficient net issuances
Financial flexibility
For Financial intermediaries
Planning, pricing & placement of securities
Monitoring of portfolio on behalf of clients
Rating benefits for regulators
Screening issues
Enhancing market transparency
Credit Rating.. an enabler
Credit ratings help in creating a more
efficient market for debt instruments
Credit ratings aid in accessing funds at
lower costs
Credit ratings facilitate the monitoring
process
June 2013ICRA LimitedAn Associate of Moody’s Investor Services
Capital adequacy requirement
Basel 2 compliance
Internal process validation / Supplement
Instrument pricing
Banks
Portfolio analysis
Commercial Paper / Debentures
Access different sources for raising debt
(banks, institutional funding etc )
Interest rates
Performance analysis vis-à-vis competition
Mutual Funds
Corporates / Issuers
Illustrations
Applications of Credit Rating
June 2013ICRA LimitedAn Associate of Moody’s Investor Services
Provide stable and easily accessible ratings
Enhance market confidence through due diligence and analytical rigor
Enable secondary market development
Reduce Uncertainty and Information asymmetry
Timely and periodic updating of changes in credit quality
Quantification of Risk
Create Wider investment opportunity
Consolidate fragmented credit decision making
Improve disclosure practices
Credit Ratings and CRAs are often used as a catalyst for the development of sound fixed capital and
financial markets, but should not be construed as a substitute for regulation or regulatory compliance
Role of Credit Rating Agencies
June 2013ICRA LimitedAn Associate of Moody’s Investor Services
Group ICRA
June 2013ICRA LimitedAn Associate of Moody’s Investor Services
ICRA commenced rating services in 1991
Services Offered
Credit Ratings
Grading Services
Covers all major Sectors
Manufacturing companies covering the entire gamut of Indian industry Oil & Gas, Power, Telecom, Textiles,
Steel, Cement, Pharmaceuticals, Paper, Fertilizer, Auto and auto ancillaries, Chemicals, Sugar, Tea, Paper,
Hotel, Construction , Real Estate, Gems & Jewellery etc.
Financial sector covering banks, financial institutions, Insurance, NBFC, primary dealers, housing finance
companies, brokerage houses etc
Project Finance including infrastructure
Structured finance including asset backed securities (Auto, CV), Mortgage backed securities (Housing loans -
fixed and floating rate), Collateralised debt obligation, Partial guarantee, Future flow transaction etc
ICRA covers 7000+ companies in various sectors such as entire manufacturing, financial, project finance including
infrastructure and structured finance
.
ICRA Overview
June 2013ICRA LimitedAn Associate of Moody’s Investor Services
Associate of Moody’s Investor Services, a leading source for credit ratings, research and risk analysis in the world
Independent and unbiased opinion
Established relationships with a large network of corporates and financial institutions
Access to top management of industry stakeholders
In-depth sectoral knowledge
Over two decades of experience having witnessed multiple business cycles
Sector specific research and analysis
.
ICRA Advantage
Rating and Grading Services
11
June 2013ICRA LimitedAn Associate of Moody’s Investor Services
Thank you