CREDIT RATING AGENCIES

          Credit Rating Agency (CRA) is a company that assigns credit ratings for issuers of certain types of debt obligations as well as the debt instruments themselves. In some cases, the servicers of the underlying debt are also given ratings.

           In most cases, the issuers of securities are companies, special purpose entities, state and local governments, non-profit organizations, or national governments issuing debt-like securities that can be traded on a secondary market. A credit rating for an issuer takes into consideration the issuer’s credit and affects the interest rate applied to the particular security being issued.

           CRAs make readily-accessible assessment of the creditworthiness of issuers of debt securities and money market instruments. Currently, there are 72 CRAs worldwide that operate in international financial markets.

Role of CRAs

              In its "Final Report on the Role of Credit Rating Agencies in Structured Finance Markets," the Technical Committee of the International Organization of Securities Commissions (IOSCO) stated that the significance of CRAs rests on the risk management ability that they give to individuals, corporations, and governments that rely on their assessments. These ratings are presumed to be based on a thorough analysis of a wealth of both public and non-public information that CRAs collect on securities issuers.

WORLD CREDIT RATING AGENCIES

              Personal ratings are set by credit reference agencies in the UK, and by credit bureaus in the USA. They are different to credit rating agencies, who deal with both Corporate and Sovereign credit ratings.

Personal - for You
             We all have a credit rating calculated from our financial history and gives a lender, for example, a good idea about how able we are to pay back a loan. A poor credit rating means you may be refused a loan or be subject to higher interest rates.

Corporate - for Companies
             Companies have credit ratings too - these are called corporate credit ratings. These are used by investors in order to gain a financial indication of such areas as debt securities.

Sovereign - for Countries
             Finally, countries also get their own credit rating - this is called a sovereign credit rating. This gives an indication as to a country's level of risk for investors, as well as political risk.

Both corporate and sovereign credit ratings are assigned by a credit rating agency. Many countries have one or more credit rating agencies, and there are some which are used widely as a trusted source. We have listed these, starting with the main agencies, and then by country in alphabetical order.