What is a Credit Rating??
Credit rating is a way to measure the creditworthiness of the bonds issued by a company or government.
Creditworthiness shows the financial ability to pay back debts.
Companies or governments issue bonds/debt papers to the public in exchange for money. On maturity of those bonds, the bond issuer (the company or the government) has to return the money to the public/investors who purchased those bonds.
Individual bonds are assigned credit ratings. The rating takes into consideration a bond issuer's financial strength or its ability to pay the principal and interest on time.
While the general scale remains the same across rating agencies, the labels may differ.
There are seven credit rating agencies.
According to SEBI, the following credit rating agencies are registered and authorized to compute and share credit scores/reports with the financial institutions and applicants.
India Ratings and Research Pvt Ltd
Brickwork Ratings India Pvt Ltd
SMERA Ratings Limited
Infometrics Valuation and Rating Pvt Ltd
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