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CREDIT RATING Advisory:-

Credit rating is essentially the opinion of the rating agency on the relative ability and willingness of the issuer of a debt instrument to meet the debt service obligations as and when they arise. Credit ratings are an important tool for borrowers to gain access to loans. Good credit ratings allow companies to easily borrow money from financial institutions or debt markets at favourable terms. It means, the better the credit rating, the better the terms of the loan. If credit rating is poor, the bank may even reject a loan or charge a higher rate of interest resulting in higher borrowing costs.

At the corporate level, it is usually in the best interest of a company to look for a credit rating agency to rate its debt. Typically, credit ratings are expressed by letters corresponding to the potential risk. The highest rating (lowest risk) is represented by ‘AAA’ and the lowest rating (highest risk) is given ‘D’. The only purpose of a credit rating is to assess the credit quality of an issuer, that is, the probability of an issuer honouring or conversely defaulting on its obligations.

Why is a Credit Rating Important/Required?

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  • Enhancing Lending Credibility :
    A low credit rating can make financial institutions reluctant to extend loans, and banks may even reject loan applications. Conversely, a strong credit rating enables companies to borrow funds more easily from both financial institutions and public debt markets

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  • Interest Rate Savings :
    Credit ratings directly influence the amount a business can borrow. A good rating signals a higher likelihood of timely repayment, while a lower rating suggests a greater risk of default. High-risk companies may face higher interest rates due to the increased likelihood of defaulting.

  • Lower Borrowing Costs :
    Companies with strong credit ratings can raise funds at lower costs because lenders are more inclined to invest in low-risk opportunities. On the other hand, businesses with poor ratings may struggle to secure financing, which can hinder their growth and operations

  • Broader Borrowing Audience :
    A high credit rating attracts a wide range of potential lenders, including banks, financial institutions, and investment firms. Credit ratings from recognized agencies provide a clear and trusted assessment, making it easier for these entities to decide on lending.

  • Leveraging Ratings as a Marketing Tool :
    Companies often use their credit rating to enhance their reputation and build a stronger image with customers. A high credit rating can instil confidence in customers regarding the quality and reliability of the company's products or services.

Why Choose Us ???

  • Unmatched Expertise :
    With over a decade of experience in the Credit Rating Advisory Industry, our team of experts provides reliable, trustworthy advice that your company’s management can rely on. We are committed to delivering exceptional customer service, consistently going above and beyond to meet our clients' needs.

  • Strategic Partnerships with Rating Agencies:
    We have established strong ties with all major credit rating agencies. These partnerships enable us to navigate the rating process more efficiently and effectively, ensuring that your company receives the most favourable evaluation possible..

  • Extensive Client Success :
    As stated in our terms and conditions, which are given to all issuer clients, we retain confidentiality over all the sensitive information obtained and will not reveal it to third parties.Over the years, we have successfully assisted numerous clients in achieving their desired or higher credit ratings. Our expertise in highlighting your company’s strengths ensures that your credit rating is optimised to its fullest potential.

  • Strict Confidentiality :
    We take your privacy seriously. As outlined in our terms and conditions provided to all clients, we maintain strict confidentiality regarding all sensitive information and never disclose it to third parties.

  • Commitment to Integrity and Respect :
    Honesty, integrity, and respect are the fundamental principles that guide Finnova Advisory. We prioritise these values above all else, ensuring that our pursuit of success never compromises the ethical standards we uphold in today’s competitive landscape.

Credit Rating Process -

We help companies procure good credit rating by embracing a holistic methodology that is divided into several steps so that we consider all key factors:

Client’s Formal Request for Rating

The credit rating process begins when a company formally requests an evaluation of its financial obligations by a credit rating agency, based on the proposed instrument.

Understanding Rating Requirements

Our process starts by thoroughly understanding the specific credit rating requirements and anticipated outcomes for your company. We conduct an initial analysis of the financial data and project details provided to ensure we’re aligned with your objectives.

Analysis of Financial Statements and Related Information

Our in-house experts then dive into the analysis of your company’s past financial statements and other relevant data. We prepare forecasted financial statements and credit ratios, adjusting them according to agency methodologies, stress scenarios, and your business plan, to provide a comprehensive financial outlook.

Discussion and Presentation of Findings

Once the analysis is complete, we share our insights and feedback with you, presenting the information in a clear and compelling manner. We prepare the first draft of the presentation for the rating agency, along with supplementary materials that offer a complete picture of your company’s creditworthiness

Selection of Rating Agency

With seven credit rating agencies available, we carefully select the most suitable agency based on discussions with you and our credit analysis. We then inform you of the selected agency.

Formal Agreement between the client and us

A formal agreement is signed to proceed with the rating process.

Liaison with Credit Rating Agencies

Act as a liaison between the client and credit rating agencies, facilitating communication and ensuring that all necessary information is provided in a timely manner. Present the company’s case to the rating agency, highlighting key factors that could lead to a favourable rating.

Ongoing Support and Monitoring

The ranking is not a one-time procedure, and every year the rating of companies is assessed and evaluated. Therefore, we provide support to our clients in annual surveillance of the credit rating.

Post-Rating Advisory

Provide continuous advisory services to help the client maintain a strong credit rating in the long term

List of Registered Credit Rating Agencies -

  • CRISIL (Credit Rating Information Services of India Limited) :
    CRISIL is a leading and innovative global analytics company that provides ratings, risk and advisory, research services to numerous companies and financial institutions. The company has delivered independent opinions, actionable insights, and efficient solutions to over 100,000 customers since its inception in 1987. The company roaster of clients includes micro, small and medium companies, top global financial institutions, large corporates, and investors. It also works with insurance companies, commercial and investment banks, private equity players, and asset management companies globally. It has an interest in the businesses of Ratings, SME Solutions, India Research, Global Research & Analytics, CRISIL Coalition, Infrastructure Advisory, BI & Risk Management, and Global Analytical Center.

  • ICRA (Investment Information and Credit Rating Agency of India Limited):
    Formerly known as Investment Information and Credit Rating Agency of India Limited, ICRA Limited was set up as an independent and professional investment Information and Credit Rating Agency by leading financial/investment institutions, commercial banks, and financial services companies. At present, ICRA and its subsidiaries have formed the ICRA Group of Companies (Group ICRA). The agency performs rating for Financial Rating, Corporate Debt, SME, Mutual Funds, Structured Finance, Infrastructure, Insurance, Project, Public Finance, Market-Linked Debentures, etc.

  • CARE (Credit Analysis and Research Limited):
    CARE Ratings takes pride in being known as the second-largest credit rating agency in India. The Research and Information division of CARE provides contemporary research and information covering various industries and financial markets. The agency provides two different categories of bank loan ratings, long-term and short-term debt instruments. It also offers ratings for Initial Public Offerings (IPOs), real estate, renewable energy service companies (RESCO), financial assessment of shipyards, Energy service companies (ESCO) grades various courses of educational institutions. Today, it has emerged as the leading agency for covering many rating segments, including manufacturing, infrastructure, financial sector, banks, and non-financial services.

  • India Ratings and Research Pvt. Ltd:
    India Ratings and Research is a 100% owned subsidiary of the Fitch Group. It is committed to providing India's credit markets accurate, timely, and prospective credit opinions. Headquartered in Mumbai, the agency currently covers corporate issuers, financial institutions (including banks and insurance companies), finance and leasing companies, managed funds, urban local bodies, and structured finance and project finance companies.

  • BWR (Brickwork Ratings):
    Brickwork Ratings has been accredited by RBI and empanelled by NSIC, NCD, MSME ratings, and grading services. The agency was founded by banks, credit rating professionals, former regulators, and professors, and is committed to promoting Financial Literacy. Canara Bank, a leading public sector bank, is the promoter and strategic partner of BWR. The agency provides ratings for corporate governance, bank loans, municipal corporations, capital market instruments, SMEs, and financial institutions. It also grades real estate investments, NGOs, educational institutions, tourism, hospitals, IPOs, IREDA, MFI, and MNRE.

  • Acuite Ratings & Research Limited:
    Acuite was incorporated in 2005 as an initiative of the Ministry of Finance (GOI) and RBI to facilitate the credit rating of bank borrowers. Since most of its borrowers are SMEs, the agency chose to call as SME Rating Agency, which they later rechristened to SMERA Ratings Limited. SMERA analyses and establishes the credibility of existing micro, small, and medium enterprises (MSMEs). MSMEs can improve, grow, and avail cheaper/faster loans.

  • Infomerics Valuation and Rating Private Limited:
    Infomerics is RBI accredited and was founded by finance professionals, former bankers, and administrative services personnel. The crucial management team consists of quite a few highly qualified & experienced professionals having demonstrated illustrious attainments in the rating industry. The agency aims to provide an impartial and systematic review and assessment of creditworthiness to NBFCs, banks, companies, and small and medium-scale units.

Rating Symbols -

The credit rating agencies uses rating symbols to denote the creditworthiness and risk level. The below table contains the rating symbols used in India:

Table: Long Term Scale

Note:
For the rating categories AAA through to D, the modifier + (plus) or – (minus) may be appended to the rating symbols to indicate their relative position within the rating categories concerned. Thus, the rating of AAA+ is one notch higher than AAA, while AAA- is one notch lower than AAA.

Table: Short Term Scale

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