Submitted By:

Submitted To: Arun Kumar

Dr. Shweta Anand
Arya Priyavarat
Sunil Bansal
Vijendra Singh
Vivek Khantwal
Group no-12
Comparative Analysis of Credit Rating Agencies & Credit Rating
of
India & USA

Parameters used in analysis………

1. Location covered
2. Services Offer
3. Instrument Rated
4. Process
5. Rating Scale
 Topics Covered……

• Introduction
• Credit Rating Agencies Overview
•Indian Agencies
• CRISIL
• CARE
• ICRA
• ONICRA
• USA Agencies
•A.M. Best
•Fitch Ratings
•S & P
• Moody’s

• Comparative Analysis
•Interpretations
•Conclusion
•Some Common Questions
• Introduction
• Credit Rating Agencies Overview
•Indian Agencies
• CRISIL (Credit rating information services of India ltd.)
• CARE (Credit Analysis & Research Ltd.)
• ICRA (Investment and Credit Rating Agency of India Limited)
• ONICRA
• USA Agencies
•A.M. Best
•Fitch Ratings
•S & P
• Moody’s
• Comparative Analysis
•Interpretations
•Conclusion
•Some Common Questions
Introduction

Crediting Rating is essential to the every market but it is very to the

financial market. In India credit rating is new concept than USA. But
it is growing with the pace & now we have world class agencies like
CRISIL, CARE etc.
In our project, we have done a comparative analysis of crediting
rating between INDIA & USA. We compared it respect of credit
rating agencies and some certain parameters. Considerations of our
project are…

•India vs. USA

•Four top CRA from each country
•Compared on the basis five parameter
•Source of Information--- Secondary ( Internet)
•Descriptive in nature
• Introduction
• Credit Rating & Agencies Overview
•Indian Agencies
• CRISIL
• CARE
• ICRA
• ONICRA
• USA Agencies
•A.M. Best
•Fitch Ratings
•S&P
• Moody’s
• Comparative Analysis
•Interpretations
•Conclusion
•Some Common Questions
Credit Rating & Agencies Overview

Crediting Rating:

Credit rating is an opinion expressed by an independent professional

organization after making a detailed study of all relevant factors. Such
an opinion will be of great assistance to investors in making
investment decision. It also helps the issuers of debt instrument and
other instruments to price their issues correctly and to reach out to new
investors.

Credit Rating Agencies:

Credit Rating Agencies(CRA) are independent entities ( Like a

company), which provide the rating service to various client and
securities. Most of the case issuers of any securities pay charge of the
service of CRA.
• Introduction
• Credit Rating & Agencies Overview
•Indian Agencies
• CRISIL
• CARE
• ICRA
• ONICRA
• USA Agencies
• A.M. Best
•Fitch Ratings
•S & P
• Moody’s
• Comparative Analysis
•Interpretations
•Conclusion
•Some Common Questions
Indian
Agencies
In Indian context, the rating is done at the instance of the issuer,
which pays rating fees for this service. If it is unsatisfied with rating ,
it is at liberty not to disclose the rating given to it(It is not apply on
IPO). Indian CRA mostly limited to the India. There are following
agencies in India..

1.CRISIL:- Oldest agency promote by ICICI. S&P has stake in

CRISIL
2.ICRA:- Promoted by IFCI. Moody’s has stake in ICRA
3.CARE:- Promoted by IDBI
4.ONICRA
5.Duff and Phelps:- Co promoted by Duff and Phelps
• Introduction
• Credit Rating & Agencies Overview
•Indian Agencies
• CRISIL
• CARE
• ICRA
• ONICRA
• USA Agencies
•A.M. Best
•Fitch Ratings
•S & P
• Moody’s
• Comparative Analysis
•Interpretations
•Conclusion
•Some Common Questions
CRISIL

1. CRISIL is India's leading rating agency, and is the leading in the

world. With over a 70% share of the Indian Ratings market,
CRISIL Ratings is the agency for issuers and investors. CRISIL
Ratings is a full service rating agency that offers a comprehensive
range of rating services.
2. CRISIL has rated over 15,045 debt instruments worth Rs.26.27
trillion (over USD 507.596 billion)* issued by over 6,878 debt
issuers, including manufacturing companies, banks, financial
institutions (FIs), state governments and municipal corporations.
CRISIL Ratings also offers technical know-how overseas.
3. It will offer rating and other services in 19 countries.
4. It has provided assistance and training for setting up ratings
agencies in Malaysia (RAM) and Israel and in the Caribbean
• Introduction
• Credit Rating & Agencies Overview
•Indian Agencies
• CRISIL
• CARE
• ICRA
• ONICRA
• USA Agencies
•A.M. Best
•Fitch Ratings
•S & P
• Moody’s
• Comparative Analysis
•Interpretations
•Conclusion
•Some Common Questions
CARE

1. 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.
2. CARE Ratings has completed over 6256 rating assignments
having aggregate value of about Rs.18,248 bn (as at June 30,
2009), since its inception in April 1993. CARE is recognized by
Securities and Exchange Board of India (Sebi), Government of
India (GoI) and Reserve Bank of India (RBI) etc.
3. CARE was promoted by major Banks/FIs (financial institutions)
in India. The three largest shareholders of CARE are IDBI Bank,
Canara Bank and State Bank of India.
• Introduction
• Credit Rating & Agencies Overview
•Indian Agencies
• CRISIL
• CARE
• ICRA
• ONICRA
• USA Agencies
•A.M. Best
•Fitch Ratings
•S & P
• Moody’s
• Comparative Analysis
•Interpretations
•Conclusion
•Some Common Questions
ICRA

1. 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.
2. The international Credit Rating Agency Moody’s Investors Service
is ICRA’s largest shareholder. 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.
3. Rate to Manufacturing companies, Banks and financial institutions,
Infrastructure sector companies, Service companies, Municipal and
other local bodies, State governments, Non-banking finance
companies and Small and medium sector entities
• Introduction
• Credit Rating & Agencies Overview
•Indian Agencies
• CRISIL
• CARE
• ICRA
• ONICRA
• USA Agencies
•A.M. Best
•Fitch Ratings
•S & P
• Moody’s
• Comparative Analysis
• Interpretations
• Conclusion
• Some Common Questions
ONICRA

1. Onicra Credit Rating Agency is a path breaking innovative

organization that analyzes data and provides individual rating
solutions that enable the lender or service provider to take a valued
judgment on financial and other transactions.
2. Onicra facilitates over 200,000 transactions per day through a single
window clearance on a national basis in the telecom, banking,
insurance, health, education and automobile sector.
3. We deliver services from a national network of 150 operation centers.
Our integrated network also comprises of 4000 FOS (Fleet on
Street) personnel located at various strategic locations nationwide.
Our presence in 400 locations coupled with multilingual capabilities
lends us a competitive advantage to manage complex processes in
multiple geographic regions.
• Introduction
• Credit Rating & Agencies Overview
•Indian Agencies
• CRISIL
• CARE
• ICRA
• ONICRA
• USA Agencies
•A.M. Best
•Fitch Ratings
•S & P
• Moody’s
• Comparative Analysis
•Interpretations
•Conclusion
•Some Common Questions
USA Agencies

In USA context, there is number of company which provide crediting

rating. They have reach in whole world. They have covered about
90% market in the world. In our study we have consider following
CRA’s…..

1.MOODY’s
2.A.M. Best
3.S&P
4.Fitch
• Introduction
• Credit Rating & Agencies Overview
•Indian Agencies
• CRISIL
• CARE
• ICRA
• ONICRA
• USA Agencies
•A.M. Best
•Fitch Ratings
•S & P
• Moody’s
• Comparative Analysis
•Interpretations
•Conclusion
•Some Common Questions
A.M. Best

1. A.M. Best Company is a global full-service credit rating agency

dedicated to serving the financial and health-care service industries.
It began assigning credit ratings in 1906
2. Best's Credit Ratings are independent opinions regarding the
creditworthiness of an issuer or debt obligation
3. Best's Credit Ratings are based on a comprehensive quantitative
and qualitative evaluation of a company's balance sheet strength,
operating performance and business profile, or, where appropriate,
the specific nature and details of a debt security.
• Introduction
• Credit Rating & Agencies Overview
•Indian Agencies
• CRISIL
• CARE
• ICRA
• ONICRA
• USA Agencies
•A.M. Best
•Fitch Ratings
•S & P
• Moody’s
• Comparative Analysis
•Interpretations
•Conclusion
•Some Common Questions
Fitch Ratings
1. Fitch Ratings is a global rating agency committed to providing the
world’s credit markets with independent and prospective credit opinions,
research, and data
2. Fitch Ratings is headquartered in New York and London and is part
of the Fitch Group. In addition to Fitch Ratings, the Fitch Group also
includes Fitch Solutions, a distribution channel for Fitch Ratings
products and a provider of data, analytics, and related services

3. The Fitch Group also includes Algorithmic, a world leading

provider of enterprise risk management solutions
• Introduction
• Credit Rating & Agencies Overview
•Indian Agencies
• CRISIL
• CARE
• ICRA
• ONICRA
• USA Agencies
•A.M. Best
•Fitch Ratings
•S & P
• Moody’s
• Comparative Analysis
•Interpretations
•Conclusion
•Some Common Questions
S&P
1. Standard & Poor’s is a global leader in credit ratings and credit risk
analysis; ratings objectivity and intellectual rigor are our paramount
objectives
2. Standard & Poor’s analytical teams concentrate on corporate
finance, financial institutions, insurance companies, states and
municipalities, sovereign governments and the continued evolution of
structured finance
3. They have credit ratings outstanding on approximately US$32
trillion of debt in more than 100 countries. At the core of these
activities are Standard & Poor’s highly regarded credit analysts located
in major financial centers around the world
• Introduction
• Credit Rating & Agencies Overview
•Indian Agencies
• CRISIL
• CARE
• ICRA
• ONICRA
• USA Agencies
•A.M. Best
•Fitch Ratings
•S & P
• Moody’s
•Comparative Analysis
•Interpretations
•Conclusion
•Some Common Questions
Moody’s

1. Moody's Investors Service is among the world’s most respected

and widely utilized sources for credit ratings, research and risk
analysis
2. Moody’s commitment and expertise contribute to stable,
transparent and integrated financial markets, protecting the integrity
of credit

3. Moody's maintains offices in most of the world’s major financial

centers and employs approximately 3,000 people worldwide,
including more than 1,000 analysts. The firm also has expanded into
developing markets through joint ventures or affiliation agreements
with local rating agencies.
• Introduction
• Credit Rating & Agencies Overview
•Indian Agencies
• CRISIL
• CARE
• ICRA
• ONICRA
• USA Agencies
•A.M. Best
•Fitch Ratings
•S & P
•Moody’s
• Comparative Analysis
•Interpretations
•Conclusion
•Some Common Questions
Comparative Analysis Parameter:- Rating

INDIA (rated) USA (rated)

Credit Rating of Debt Instruments Debt ( Long & short Term), Issuers
(Commercial Paper , Fixed Deposits, Bonds and
Debentures , Redeemable Preference Shares ,US Municipal Ratings, Corporate Family
Loans ,Certificate of Deposits, StructuredRatings, Probability of Default Ratings , Loss
Obligations ) Given Default Assessments, Covenant Quality
Assessments, Speculative Grade Liquidity
Issuer Rating ,IPO Grading , Recovery Ratings,Ratings, Bank Deposit Ratings , US Bank Other
Fund Credit Quality Rating, Rating of CapitalSenior Obligation Ratings , Bank Financial
Protection Schemes , Claims Paying AbilityStrength Ratings, Insurance Financial Strength
Rating of Insurance Companies, CorporateRatings, Money Market and Bond Fund Ratings,
Governance Ratings ,SME Rating, InfrastructureNational Scale Ratings
Ratings ,Sub-sovereign Ratings ,Microfinance
Institution (MFI) Grading ,Grading of theCountry Ceiling for Bonds and Other Foreign
Construction Entities, Grading of courses offeredCurrency Obligations , Country Ceiling for
by Maritime Training Institutes (MTIs) ,Rating ofForeign Currency Bank Deposits, Country
Parallel Marketers of LPG and Kerosene, RatingCeiling for Bonds and Other Local Currency
of Collective Investment Schemes, SSI Rating,Obligations, Local Currency Deposit Ceiling
Rating of Urban Local Bodies/Multiple Bonds ,
Rating of Urban Local Bodies
Comparative Analysis Parameter:- Rating scale

Standard & Poor’s Crisil's

Symbol(Rating Description(with regard to the
category) likelihood of meeting the debt
obligations on time)
AAA Highest Safety
AA High Safety
A Adequate Safety
BBB Moderate Safety
BB Inadequate Safety
B High Risk
C Substantial Risk
D Default
 Moody's ICRA’s

Aaa Obligations rated Aaa are judged to be of the highest AAA The highest-credit-quality rating assigned by ICRA. The
quality, with minimal credit risk rated instrument carries the lowest credit risk

Aa Obligations rated Aa are judged to be of high quality and

AA The high-credit-quality rating assigned by ICRA. The rated
are subject to very low credit risk instrument carries low credit risk
A Obligations rated A are considered upper-medium grade
and are subject to low credit risk A The adequate-credit-quality rating assigned by ICRA. The
rated instrument carries average credit risk
Baa Obligations rated Baa are subject to moderate credit risk.
They are considered mediumgrade and as such may BBB The moderate-credit-quality rating assigned by ICRA. The
possess certain speculative characteristics rated instrument carries higher than average credit risk
Ba Obligations rated Ba are judged to have speculative
elements and are subject to substantial credit risk BB The inadequate-credit-quality rating assigned by ICRA.
The rated instrument carries high credit risk
B Obligations rated B are considered speculative and are
subject to high credit risk B The risk-prone-credit-quality rating assigned by ICRA. .
The rated instrument carries very high credit risk
Caa Obligations rated Caa are judged to be of poor standing
and are subject to very high credit risk.
C The poor-credit-quality rating assigned by ICRA. The rated
Ca Obligations rated Ca are highly speculative and are likely instrument has limited prospects of recovery
in, or very near, default, with some prospect of recovery
of principal and interest. D The lowest-credit-quality rating assigned by ICRA. The
rated instrument has very low prospects of recovery
C Obligations rated C are the lowest rated class of bonds
and are typically in default, with
little prospect for recovery of principal or interest
Comparative Analysis Market wise

INDIA U.S.

CRISIL: Its providing the services in A.M. Best: Its providing the services
19 countries. Basically in Africa & in around 80 countries. Basically in
Asia Asia pacific, Europe. Canada

All Other Indian CRA’s working with in FITCH Rating: Working about in 150
India. countries. Normally in all continents

S&P: Working in about more than

120 countries America, Europe , Asia
&Africa

Moody’s: About in 100 countries.

America, Europe , Asia &Africa
Comparative Analysis Parameter:- Process

S and P Rating Process

A.M. Best Rating Process Onicra Rating Process
• Introduction
• Credit Rating & Agencies Overview
•Indian Agencies
• CRISIL
• CARE
• ICRA
• ONICRA
• USA Agencies
•A.M. Best
•Fitch Ratings
•S & P
• Moody’s
• Comparative Analysis
•Interpretations
•Conclusion
•Some Common Questions
Interpretations

1. India is somewhat following USA rating process

2. Indian CRA influence by USA, Because USA agencies have
stake in Indian agencies
3. Indian agencies are not rating the countries as whole
4. Indian agencies have not reached in world market
5. Special product like LPG, Petrol pump are rated in India by
agency not in USA
6. In USA rating scale is wide
7. The rating of instruments are higher in USA as compare to India
8. Issuers of IPO have to accept the rating of first assign agency in
India, mean no choice to change
• Introduction
• Credit Rating & Agencies Overview
•Indian Agencies
• CRISIL
• CARE
• ICRA
• ONICRA
• USA Agencies
•A.M. Best
•Fitch Ratings
•S & P
• Moody’s
• Comparative Analysis
•Interpretations
•Conclusion
•Some Common Questions
Conclusion
• Introduction
• Credit Rating & Agencies Overview
•Indian Agencies
• CRISIL
• CARE
• ICRA
• ONICRA
• USA Agencies
•A.M. Best
•Fitch Ratings
•S & P
• Moody’s
• Comparative Analysis
•Interpretations
•Conclusion
•Some Common Questions
Some Common Questions

1.How does a credit rating agency differ from

a credit bureau?
2.Is a credit rating a recommendation to invest
in a debt instrument?
3.What is the difference between credit ratings
and equity research?
4.How does a credit rating differ from an
audit?
5.Is competition desirable in the credit rating
industry?
6.What are investment and speculative grade
ratings?