...CRAB Rating Scale CRAB Long Term Rating Scale CRAB Short Term Rating Scale CRAB Long Term Rating Scale Rating Methodologies: It’s different for several sectors. Such as several methodologies for bank rating, financial institution rating, corporate rating, general insurance rating, life insurance rating, government owned enterprise rating and securitization rating. Other services: 1. Grading Services 2. Advisory & Consulting Services 3. Information Service National Credit Ratings Ltd National Credit Ratings Limited (NCR) is a credit rating agency in Bangladesh. It was incorporated as a public limited company under the Registrar of Joint Stock Companies in August 2010 and received its certificate for commencement of business in July 2010. It was granted a licence by the Securities & Exchange Commission (SEC) of Bangladesh for operating as a credit rating company in September 2010. The formal launching of the company was held on 18 October 2010. Managing director & CEO: MD. Momin Ullah Patwary, BP, is a former secretary to the Govt. of Bangladesh. Services: The services provide by the agency are followings: Entity Rating, Instrument Rating, Insurance Company rating, Asset Manager Rating, Sectoral Grading and Ranking. Methodology A true and fair opinion is our responsibility. NCR gives opinion as to the ability of an entity to meet its financial obligations. The rating process primarily concentrates on business and financial risks...
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...CREDIT RATING * A credit rating evaluates the credit worthiness of a debtor, especially a business (company) or a government. It is an evaluation made by a credit rating agency of the debtor's ability to pay back the debt and the likelihood of default.[3] * Credit ratings are determined by credit ratings agencies. The credit rating represents the credit rating agency's evaluation of qualitative and quantitative information for a company or government; including non-public information obtained by the credit rating agencies analysts. * Credit ratings are not based on mathematical formulas. Instead, credit rating agencies use their judgment and experience in determining what public and private information should be considered in giving a rating to a particular company or government. The credit rating is used by individuals and entities that purchase the bonds issued by companies and governments to determine the likelihood that the government will pay its bond obligations. * A poor credit rating indicates a credit rating agency's opinion that the company or government has a high risk of defaulting, based on the agency's analysis of the entity's history and analysis of long term economic prospects. In India there are 5 credit rating agencies. First, Credit Rating InformationServices Of India Limited (CRISIL) set up by ICICI AND UTI in 1988. Secondly InvestmentInformation and Credit Rating Agency of India limited (ICRA) set up by IFCI in 1991. Thirdly,Credit Analysis...
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...Internship Report Impact of Credit Rating on Corporate and Banking Sectors of Bangladesh A Study based on Ratings of Credit Rating Agency of Bangladesh Limited (CRAB) Exam Roll: 091127 Internship Report on Impact of Credit Rating on Corporate and Banking Sector of Bangladesh A Study based on Ratings of Credit Rating Agency of Bangladesh Ltd. (CRAB) Prepared For: Chairman Internship Placement Committee Prepared by: Exam Roll Number: 019927 Class ID: 892 4th year, 8th semester Batch Number: 18th, BBA Program Academic Session: 2008-09 Institute of Business Administration (IBA-JU) Jahangirnagar University, Savar, Dhaka 1342 Date: 16.02.2013 Letter of Transmittal February 16, 2013 Chairman Internship Placement Committee Institute of Business Administration Jahangirnagar University Savar, Dhaka 1342. Subject: Submission of Internship Report Dear Sir, It is an event of great pleasure for me to prepare and present the internship report on ‘Impact of Credit Rating on Corporate and Banking Sectors of Bangladesh: A Study based on Rating of Credit Rating Agency of Bangladesh Limited (CRAB)’ which is a requirement for the completion of BBA program. In this report I have tried to identify different aspects of the credit rating service and its impact on the corporate and banking sectors of the country. I have tried my best to organize all relevant information and do according to the instructions of preparing...
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...National Institute of Securities Markets Assessment of Long Term Performance of Credit Rating Agencies in India July 2009 5th Floor, Plot No.82, Sector 17, Vashi, Navi Mumbai 400 705 1 Contents Terms of Reference Executive Summary Acknowledgements CRAs: Relevance and Perspective Raters and Ratings: Evolution and the Current State of the Art Critical Evaluation of Ratings Rating Transition and Default Study Emerging Trends and Alternate Approaches Conclusions and Recommendations References Annexure Sample Questionnaire 3 4 14 15 21 32 43 58 63 74 78 2 Terms of Reference This Study has been commissioned by NISM as desired by the Committee on Comprehensive Regulation of CRA’s in India, to look into the legal and policy framework for regulating the activities of Credit Rating Agencies (CRAs), vide letter bearing Reference No. F.No.12/11/07-PM, dated 16.1.2009. The Terms of Reference are listed as under: 1. Assessment of the performance of CRAs in India in terms of parameters like default and transition data 2. How much information asymmetry is bridged by CRAs 3. How far CRAs assessment helps financial regulation 4. Accountability, corporate governance issues of CRAs 5. Disclosures of methodologies of rating 6. Rating of complex products like structured obligation 7. Uniformity or otherwise in definition and rating nomenclature of CRAs in India 8. Consistency of rating data with accounting data 9. Overall evaluation of what CRAs have done in terms of value...
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...The Pakistan Credit Rating Agency Limited STRUCTURED FINANCE RATING KARACHI ELECTRIC SUPPLY COMPANY LIMITED APRIL 2012 The Pakistan Credit Rating Agency Limited STRUCTURED FINANCE KARACHI ELECTRIC SUPPLY COMPANY LIMITED REPORT CONTENTS Summary Report Detailed Report: PAGE 1 2 2 4 7 Rating Profile Instrument Structure Assessment ANNEXURES BoD Profile Standard Rating Scale I II April 2012 www.pacra.com STRUCTURED FINANCE The Pakistan Credit Rating Agency Limited RATINGS (APRIL 2012) KARACHI ELECTRIC SUPPLY COMPANY LIMITED [KESC] RATING RATIONALE & KEY DRIVERS SECURED, RATED, LISTED TFC (I) OF PKR 300MLN TFC (II) OF PKR 1,200MLN TFC (III) OF PKR 500MLN PRELIMINARY AA AA AA TFC (I) Tenor Issue size (PKR mln) Greenshoe option Profit Rate Profit payment Principal repayment TFC (II) TFC (III) 13 months 36 months 60 months 300 13.00% Monthly Bullet 1,200 700 14.75% Quarterly Bullet 500 300 15.50% Quarterly Bullet ANALYSTS Samiya Mukhtar +92 42 35869504 samiya@pacra.com Rana Muhammad Nadeem +92 42 35869504 nadeem@pacra.com The rating primarily draws its strength from the security structure of the instrument. This includes, inter alia, first parri passu charge with 1.2x minimum throughput of receivables from specific 250 corporate consumers and first pari passu charge with 1.2x minimum throughput of excess proceeds (after meeting certain pre-agreed financial obligations) entitled to KESC relating...
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...topic ‘Role of a Credit Rating Agency in the capital market development of Bangladesh’ is a significant one in the present capital market context of Bangladesh. The report focuses on increasing the understanding on the workings of the present capital market, the concept of credit rating and the effect it can have on the capital market. 1.1 Origin This report has been authorized to the students as an integral component of the Business Communication (C- 501) course requirement. The Course Instructor Ms. Mahjabeen Ahmad has authorized this report on March 27, 2002 with the date of submission being June 30, 2002. 1.2 Objective The main objective of the report is: ▪ To portray the role that a Credit Rating Agency (CRA) can play in the capital market development of Bangladesh The sub-objectives of the report are: ▪ To review the current situation of the capital market of Bangladesh ▪ To discuss the activities /operations of a Credit Rating Agency 1.3 Scope The scope of the report is limited to the presentation of a broad overview of the capital market of Bangladesh, definition and description of general activities of a Credit Rating Agency and the impact it can have on Bangladeshi capital market. The depiction does not include any discussion on the Stock Exchanges of Bangladesh or the International capital market. Since the rating business in Bangladesh is still at its infancy, no practical example of rating in Bangladesh could be...
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...Internship Report on Credit Rating and Factore of Affecting The Bank rating Executive Summery Credit rating agencies (subsequently denoted CRAs) specialize in analyzing and evaluating the creditworthiness of corporate and sovereign issuers of debt securities. In the new financial architecture, CRAs are expected to become more important in the management of both corporate and sovereign credit risk. The logic underlying the existence of CRAs is to solve the problem of the informative asymmetry between lenders and borrowers regarding the creditworthiness of the latter. Issuers with lower credit ratings pay higher interest rates embodying larger risk premiums than higher rated issuers. Moreover, ratings determine the eligibility of debt and other financial instruments for the portfolios of certain institutional investors due to national regulations that restrict investment in speculative-grade bonds. The banking sector in Bangladesh passed through significant changes in terms of structure and policies. Starting with six nationalized commercial and a few specialized banks after independence, the total number of banks has reached 48 at present including private and foreign commercial banks. The Bangladesh financial sector is under going through a phase of transaction, transformation and convergence. The regulators are more active then ever before to bring the sector up to an international standard. The competitive environment created with the presence of too many banks in...
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...Introduction Credit rating agencies play a key role in todays and the last century’s financial life. Their function is to analyze and then publish country’s and firm’s or basically any financial entity’s/product’s creditworthiness. However, their defining impact on today’s economics is goes way beyond their definition. The Three Big, Moody’s, S&P and Fitch are in possession of 95% market share, that means the competition is negligible. The lack of competition multiplies their individual effect on the markets and raises the question of whether they work with the moral standards today’s stakeholders are expecting from them. (The Role Played by Credit Rating Agencies in the Financial Crisis, Asian Development Bank Institute, 2012) Major investors and creditors are knowingly deciding about their financial moves based on a very narrow and far from comprehensive information. The three bigs ratings are certainly part of these data and they do have major consequences on whether a company will invest in a certain country or on what terms will a bank lend capital to a given enterprise. If we go even further, we can see that credit ratings will have impact on a country’s fiscal and monetary policies, industries’ success or in many case failure, and through that, on people’s everyday life and economic well-being. Now that the concept of ratings are not so abstract, let’s take a look at how they relate to the financial crises. The 2007 credit crisis were caused by the overvaluation...
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...INTRODUCTION Country risk refers to the risk of investing or lending in a country, arising from possible changes in the business environment that may adversely affect operating profits or the value of assets in the country. For example, financial factors such as currency controls, devaluation or regulatory changes, or stability factors such as mass riots, civil war and other potential events contribute to companies' operational risks. This term is also sometimes referred to as political risk; however, country risk is a more general term that generally refers only to risks affecting all companies operating within or involved with a particular country. Many investors choose to place a portion of their portfolios in foreign securities. This decision involves an analysis of various mutual funds, exchange traded funds (ETFs), or stock and bond offerings. However, investors often neglect an important first step in the process of international investing. When done properly, the decision to invest overseas begins with determining the riskiness of the investment climate in the country under consideration. Country risk refers to the economic, political and business risks that are unique to a specific country, and that might result in unexpected investment losses. This country risk analysis is a fundamental step in building and monitoring an international portfolio. Investors that use the many excellent information sources available to evaluate country risk will be better prepared...
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...it matter who pays for bond ratings? Historical evidence$ John (Xuefeng) Jiang a,n, Mary Harris Stanford b, Yuan Xie c a Eli Broad College of Business, Michigan State University, N252 Business Complex, East Lansing, MI 48824, USA M. J. Neeley School of Business, Texas Christian University, Fort Worth, TX 76129, USA c Fordham University, 441E Fordham Road, Bronx, NY 10458, USA b a r t i c l e i n f o Article history: Received 12 December 2010 Received in revised form 13 July 2011 Accepted 9 August 2011 Available online 7 April 2012 JEL classification: G18 G20 G28 Keywords: Credit ratings Investor pay Issuer pay Moody’s S&P abstract We test whether Standard and Poor’s (S&P) assigns higher bond ratings after it switches from investor-pay to issuer-pay fees in 1974. Using Moody’s rating for the same bond as a benchmark, we find that when S&P charges investors and Moody’s charges issuers, S&P’s ratings are lower than Moody’s. Once S&P adopts issuer-pay, its ratings increase and no longer differ from Moody’s. More importantly, S&P only assigns higher ratings for bonds that are subject to greater conflicts of interest, measured by higher expected rating fees or lower credit quality. These findings suggest that the issuer-pay model leads to higher ratings. & 2012 Elsevier B.V. All rights reserved. 1. Introduction This paper investigates whether charging bond issuers for credit ratings leads to higher ratings. The three major credit rating agencies—Standard & Poor’s (S&P), Moody’s...
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...Šiame dokumente pateikiama glausta sistemas kredito rizikos vertinimo įmonėje credit domain (SMEs and larger businesses), that can guide lenders when choosing kredito domenas (MVĮ ir didesnėmis įmonėmis), kurios gali padėti skolintojams renkantis appropriate data and tools. atitinkami duomenys ir įrankiai. Traditionally, lenders relied upon judgmental assessments of Tradiciškai, skolintojai, remtis subjektyvių nuomonių vertinimais the five Cs (capacity, capital, character, collateral, and conditions), but modern 5 Ca (galia, kapitalas, charakteris, įkaitas, ir sąlygos), bet modernus technology has allowed them to amass and capitalise on data. technologija leido jiems kaupti ir pasinaudoti duomenų. Besides judgment, lenders Be nuovoką, skolintojų can also apply scoring, reduced-form, and structural models—with the choice being taip pat gali taikyti įvertinimas balais, sumažinta forma, ir struktūrinio modelių pasirinkimas yra dependent upon the size and nature of the firms being assessed. priklauso nuo vertinamos įmonių dydį ir pobūdį. For the largest Didžiausias companies with traded securities, reduced-form and structural models can be used to bendrovėms, turinčioms vertybinių popierių apyvartą, sumažinti forma ir struktūrinių modelių gali būti naudojamas interpret their prices and price movements. interpretuoti savo kainas ir kainų svyravimus. In contrast, credit scoring is used mostly in Tuo tarpu kredito vertinimo, naudojamas daugiausia data-rich small-business...
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...Analyze the activities of the International Credit Rating Agencies Credit Rating Agencies (CRA) have a very important role in all economies, both Domestic and Foreign transactions. “CRAs assess the credit risk of corporate or government borrowers and issuers of fixed-income securities.” The term Credit Rating Agency translates to a corporation that rates certain credit risks exposed to the corporate borrowers, therefore it involves the use of money in regards of both Issuing Loans and Borrowing. The main purpose of the CRA is to provide guidance to people who wish to give out loans to borrowers or Vice-versa, as it simply helps those people understand the risks of such measures and what losses they may incur if the borrower defaults on his loan, refuses to pay etc… Therefore the CRA measures how likely a borrower will be able to pay back. Lenders, corporations, and governments use the guidance of CRA’s. A Lender uses the CRA to clear his uncertainty of whether or not his loan will return to him, Corporations and Governments use the CRA to help determine or increase their Capital in the institution. CRA’s are monitored by Task Force Agencies, where they are formed by a committee known as the “Technical Committee of the International Organization of Securities Commissions” Or ISOCO for short. Those Task Force agencies monitor aspects in the CRA such as: * Whether the CRA is disclosing the information about their Rating. * The problems that the CRA faces, which can...
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...Tarunkumar Patel MGMT 407-10 Executive Leadership Course Paper Topic: Crisis Management Instructor: Mr. Cleamon Moorer Introduction: I decide to work on a topic of Crisis Management. It is the process of preparing for and responding to an unpredictable negative event to prevent it from escalating into an even bigger problem, or worse, exploding into a full-blown, widespread, life-threatening disaster. Crisis management involves the execution of well-coordinated actions to control the damage and preserve or restore public confidence in the system under crisis. Crises are no longer an aberrant, rare, random or peripheral feature of today’s society. They are built into very fabric and fiber of modern societies. While not all crises can be foreseen, let alone prevented, all of them can be managed far more effectively if we understand and practice the best of what is humanly possible. Crisis management is no longer only for those assigned to the task; it is for each and every person. Every experience of a disaster has shown how ordinary people have to rise to the challenges of a crisis. Crisis management efforts should be directed towards helping the organization recover and rise from the embers of the crisis and ensure continuity. The field of crisis management deals with human-caused crisis and natural disasters. It’s hard for human to stop natural disasters to happen but definitely with the advancement of technology we can now take some pre steps to cause a big loss...
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...workers. It guarantees the execution necessities ensuring health, safety and, freedom of association, disciplinary practices and compensations as well as policies against child and forced labor, unfairness. The company exercises a life cycle approach to minimize the EHS (environment, health and safety) impact of its product from extraction of raw material till the end product. It conveys its policies not only to workers rather to its suppliers, contractors and consultants and expects them to be stick on defined rules and policies. Shakarganj has good timely credit payment history therefore The Pakistan Credit Rating Agency Limited assigned the long-term and short-term entity ratings of “BBB+”and “A2” to the company. These ratings donated low credit risk expectation and adequate capacity of repayments to the company. Company has relatively edgy capital structure, these ratings recognizes the...
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...1.State the administrative agency which controls the regulation. Explain why this agency and your proposed regulation interests you (briefly). Will this proposed regulation affect you or the business in which you are working? If so, how? The proposed regulation that is of interest is “Removing Any References to or Reliance on Credit Ratings in Commission Regulations; Proposing Alternatives to the Use of Credit” submitted by Commodity Futures Trading Commission or CFTC. I am interested in this regulation because I deal with swaps trading every day. This proposed regulation will most likely not affect my company because we invest in the more standardized derivatives. We also have internal auditors to oversee how we invest our clients’ funds. 2. Describe the proposal/change. The proposed change is about clarifying and standardizing the current legislation on swaps. As it stands now, the regulations on swaps trading on few and far between. Along with those regulations are privately-run, for-profit credit rating agencies. These two problems combined are how Goldman Sachs was able to swindle their investors and likely why this regulation was originally proposed. Many investors looking to engage in a swap transaction first have to decided what type of swap they would like to enter into. I will use an Interest Rate Swap or IRS as reference for my example (although an IRS is one of the more basic and regulated swaps). An IRS is a swap where investors decide on a notional...
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