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Is rating a one time exercise?

No. To protect the interest of investors, SEBI has mandated that every credit rating agency shall, during the lifetime of the securities rated by it, continuously monitor the rating of such securities and carry out periodic reviews of all published ratings and disclose the revised ratings.

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Who regulates rating agencies?

In India, credit rating agencies are regulated by SEBI. The SEBI (Credit Rating Agencies) Regulations, 1999 govern the credit rating agencies and provide for eligibility criteria for their registration, monitoring and review of ratings, requirements for a proper rating process, avoidance of conflict of interest, code of conduct and inspection of rating agencies by SEBI, among other things.

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What are investment and speculative grade ratings?

An investment grade rating signifies the rating agency’s belief that the rated instrument is likely to meet its payment obligations. The debt instruments rated 'BBB' and above are classified as investment grade ratings. Instruments that are rated ‘BB‘ and below are classified as speculative grade category ratings in which case the ability to meet the payment obligations is considered to be “speculative”. Instruments rated in the speculative grade are considered to carry materially higher risk and a higher probability of default compared to instruments rated in the investment grade.

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What do the “+” and “-”sign indicate in a rating?

Plus and minus symbols are used to indicate finer distinctions within a rating category. The minus symbol associated with ratings has no negative connotations. In fact, ratings in a higher rating category such as ‘AA-‘ are stronger than ratings in a lower rating category such as ‘A+‘.

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Are rating symbols the same across all types of debt instruments?


No. Rating symbols may vary depending on the type of debt instrument, as for example long term or short term.

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What do the various rating symbols mean?


Each rating symbol is an alphanumeric representation of the degree of repayment risk associated with debt instruments.

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How is credit rating done?

Ratings are based on a comprehensive evaluation of the strengths and weaknesses of the company along with an in-depth study of the industry as well as macro-economic, regulatory and political environment.

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Is a credit rating in the nature of a recommendation?

No, a credit rating is not a recommendation to buy, sell or hold a debt instrument. It is a comment only on the credit risk in an instrument. Rating only provides an additional input to the investor and the investor is required to make his own independent and objective analysis before arriving at an investment decision.

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What is credit rating?


A credit rating is an opinion regarding timely payment of interest and principal on a debt instrument. A simple alphanumeric symbol is normally used to convey a credit rating.