Credit Rating Agencies:
They play an important role in grading the issue, helping the investors to decide whether to invest or not. It is intended that IPO fundamentals would be graded on a five point scale from grade 5 (indicating strong fundamentals) to grade 1 (indicating poor fundamentals). The grade would be read as: ‘Rating Agency Name’ IPO Grade 1.
For example, CARE IPO Grade 1, CRISIL IPO Grade 1 etc. The assigned grade would be a one-time assessment done at the time of the IPO and meant to aid investors who are interested in investing in the IPO. The grade will not have any ongoing validity.
Some of the credit rating agencies in India are:
- Credit Rating Information Services of India Limited (CRISIL).
- Investment Information and Credit Rating Agency of India (ICRA).
- Credit Analysis & Research Limited (CARE).
- Duff & Phelps Credit Rating India Private Ltd. (DCR India).
- ONICRA Credit Rating Agency of India Ltd.
- Ratings awarded by major credit rating agencies are:
- AAA : Highest Safety
- AA : High Safety
- A : Adequate Safety
- BBB : Moderate Safety
- BB : Sub -moderate Safety
- B : Inadequate Safety
- C : Substantial Risk
- D : Default