Credit rating agency

A 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 (i.e., bonds) that can be traded on a secondary market. A credit rating for an issuer takes into consideration the issuer's credit worthiness (i.e., its ability to pay back a loan), and affects the interest rate applied to the particular security being issued. The value of such security ratings has been widely questioned after the 2007-09 financial crisis. In 2003 the U.S. Securities and Exchange Commission submitted a report to Congress detailing plans to launch an investigation into the anti-competitive practices of credit rating agencies and issues including conflicts of interest.[1] More recently, ratings downgrades during the European sovereign debt crisis of 2010-11 have drawn criticism from the EU and individual countries. A company that issues credit scores for individual credit-worthiness is generally called a credit bureau (US) or consumer credit reporting agency (UK).

List of credit rating agencies

Agencies that assign credit ratings for corporations include:

A. M. Best (U.S.) Baycorp Advantage (Australia) Capital Intelligence (Cyprus)[34] Capital Standards Rating (Kuwait)[35] Credo line (Ukraine) Dagong Global (People's Republic of China) Dominion Bond Rating Service (Canada) Egan-Jones Rating Company (U.S.) Fitch Ratings (Dual-headquartered U.S./UK) CIBIL (India) Japan Credit Rating Agency, Ltd. (Japan)[36] Moody's Investors Service (U.S.) Muros Ratings[37] (Russia alternative rating agency) Rapid Ratings International (U.S.) Standard & Poor's (U.S.) Weiss Ratings (U.S.) There are no notable European CRAs, except for Fitch, 80% of which is owned by FIMALAC, a French firm.

A.M. Best Company, Inc., headquartered in Oldwick, New Jersey, is a rating agency designated as a Nationally Recognized Statistical Rating Organization (NRSRO) by the United States Securities and Exchange Commission.

Founded in 1899 by Alfred M. Best in New York City, the privately held company moved to Morristown, New Jersey, in 1965, and subsequently to Oldwick, New Jersey, in 1974.[1] It also maintains offices in London and Hong Kong and a news bureau in Washington, D.C. A.M. Best issues financial-strength ratings measuring insurance companies' ability to pay claims. It also rates financial instruments issued by insurance companies, such as bonds, notes, and securitization products Unlike fellow NRSROs Standard & Poor's, Moody's and Fitch Ratings -- all three of which issue ratings for a broad range of business sectorsA.M. Best historically has focused exclusively on the insurance marketplace.

Veda Advantage

Type

Private Company

Founded

1967

Headquarters

Sydney, Australia

Products

Business Services

Website

www.vedaadvantage.com

Veda Advantage is the largest credit reference agency in Australia and New Zealand. It provides credit reporting, credit scoring, and marketing analytics services. The Company was previously known as Baycorp Advantage, which was a merger of Australian company Data Advantage and New Zealand Company Baycorp. The name change was prompted by the sale of the Baycorp Collection Services which will retain the Baycorp name. The name change has already been applied to its listing on the Australian Stock Exchange. Data Advantage previously owned Credit Advantage, which itself was formerly known as the Credit Reference Association Of Australia. It held records on over 12 million people and one million businesses. Credit Advantage was used by approximately 3,800 credit providers, who made a total of 45,000 enquiries per day.

Due to legal restrictions, Credit Advantage did not report any positive information. It wes essentially a "blacklist" containing listings of accounts that are at least 60 days past due, along with public records of lawsuit judgements and bankruptcies. Bounced cheques of over $100 (after two attempts at clearing) and enquiries wereed also listed. Credio line:

History
Information and Rating Agency Credo Line was established with support of foreign export credit agencies and Ukrainian partners in June 2008 with the view to achieving maximum transparency on the information market of CIS countries and qualitative improvement of rendered services. The described support is explained by utmost necessity of establishment of an objective, independent and specialized rating agency, professionally able to credit assess risks of importing enterprises located in Ukraine, as well as throughout territory of the CIS region. Now and then its a privately-owned company with 100% Ukrainian capital, run since the foundation date by the general Director Ms. Katerina Bogdanenko . The Agencys Goal is to systematize and discipline the beneficial multilateral foreign economic relations between foreign partners and CIS partners on all of cooperation stages. Different mentality, various approaches to business conduct, different legislative base, accounting standards should not be a barrier while any international transaction between mentioned parties, and with its services complex Credo Line is putting every effort to facilitate such multicultural business collaboration.

[edit] Ratings & Rating scale

In the process of credit rating assignment the Agency uses its own complex methodology. Agencys rating methodology is based on a special balanced system of indexes, which includes an influence of country risk and is recognized by leading export credit agencies and other financial institutions. The completeness of indexes list used in the process of evaluation of a company's financial position and performance (absolute indexes, financial stability ratios, solvency ratios, profitability ratios, efficiency ratios, insolvency ratios) and special procedure of reliability audit and correctness of forming basic data allow to evaluate financial position and performance of a rated company in the most objective way. Moreover, the given methodology is particularly adjustable within the trade financing processes and enables to accurately determine the maximum value of rating and maximum amount of credit limit. Scale of credit rating used by the Agency analysts was elaborated as well by the Agency itself for the purpose of estimation of creditworthiness, the level of financial stability, aptitude towards country risk, as well as nonpayment risk of a rated company. Like others world-wide credit rating agencies (the so-called Big three credit rating agencies - Standard & Poor's, Moody's Investor Service and Fitch Ratings), Credo Line uses the same internationally-recognized letter designations such as A, B, C and D.

Dagong Global Credit Rating

Dagong Global Credit Rating Co.

Industry

Financial Services

Founded

1994

Headquarters

Beijing, China

Key people

Guan Jianzhong (Chairman)

Website

dagongcredit.com

Dagong Global Credit Rating (; pinyin: Dgng Guj Zxn Pngg Yuxin Gngs) is a credit rating agency based in China. It is one of the few notable non-US based credit rating agencies.[1] It is recognized as a credit rating agency which gave the US debt a lower credit rating than that given by the three traditional rating agencies Moody's, Standard and Poor's and Fitch.[2] The U.S. Securities and Exchange Commission has refused to recognize Dagong's ratings because of the commission's inability to supervise the Beijing-based agency.[3]

Long-term credit ratings

Dagong rates borrowers on a scale from AAA to C. Intermediate ratings are offered at each level between AA and CC (e.g., AA+, AA, and AA-).[4]

AAA: Highest credit rating AA: Very High credit rating A: High credit rating BBB: Medium credit rating BB: Low medium credit rating B: Relatively low credit rating CCC: Low credit rating CC: Very low credit rating. C: Lowest credit rating. Issuer is unable to meet financial obligations and possibly in the process of bankruptcy.

[edit] Short-term credit ratings

Debt with maturity dates of 1 year or shorter are rated on a scale from A-1 to D. No intermediate ratings (e.g., B+ and B-) are used. [4]

A-1: Highest credit rating A-2: Good credit rating A-3: Fair credit rating B: Significant speculative credit rating C: High default risk credit rating D: Default

DBRS is a credit rating agency headquartered in Toronto, Ontario. Founded in 1976 by its current owner and president, Walter Schroeder, it is the largest rating agency in Canada. It is one of ten Nationally Recognized Statistical Rating Organizations in the United States, though significantly smaller than market leaders Moody's, Standard & Poor's and Fitch Ratings. It has also received ECAI recognition from several European countries.

[edit] Rating scale

Rating Scale: Commercial Paper and Short-Term Debt The DBRS short-term debt rating scale is meant to give an indication of the risk that a borrower will not fulfill its near-term debt obligations in a timely manner. Every DBRS rating is based on quantitative and qualitative considerations relevant to the borrowing entity. Egan-Jones Rating Company, also known as EJR, was founded in 1995 and actively rates the credit worthiness of approximately 2000+ high yield and high grade U.S. corporate debt issuers. Egan-Jones is wholly supported by investors to minimize the potential for conflicts of interest in accessing credit quality[citation needed]. On Dec. 21, 2007, the SEC granted Egan-Jones NRSRO status, thus including them in a group of what is currently ten recognized NRSROs[citation needed]. The effectiveness of Egan-Jones' investor supported credit ratings has been measured by third parties including Richard D. Johnson of the Kansas City Federal Reserve, the Stanford University Business School and the University of Michigan's Business School.Studies[citation needed] Sean Egan, principal of Egan-Jones Rating, appeared before Congress on October 22, 2008 and argued that issuers of complex securities "shopped" for ratings which resulted in a race to the bottom in terms of credit transparency. Rather than "beat up Moody's and S&P for behavior" they'd been financially motivated to pursue, the government needs to support a new business model paid for by investors, not issuers, to support the funding ecosystem which has so severely broken down, he asserted. Citation here: Congressional Record, Oct 22, 2008: https://house.resource.org/110/org.c-span.281924-1.pdf Egan-Jones on July 16, 2011, became the first NRSRO to cut its rating on the United States from AAA to AA+.[1] The Fitch Group is a majority-owned subsidiary of FIMALAC, headquartered in Paris. Fitch Ratings, Fitch Solutions and Algorithmics, are part of the Fitch Group. Dual-headquartered in New York and London with 51 offices worldwide, Fitch Ratings positions itself as a global rating agency dedicated to providing value beyond the rating

through independent and prospective credit opinions, research and data. Fitch Ratings was one of the three Nationally Recognized Statistical Rating Organizations (NRSRO) designated by the U.S. Securities and Exchange Commission in 1975, together with Moody's and Standard & Poor's. It is one of the "Big Three credit rating agencies" (Standard & Poor's, Moody's Investor Service and Fitch Ratings). [1] The firm was founded by John Knowles Fitch on December 24, 1913 in New York City as the Fitch Publishing Company. It merged with London-based IBCA Limited in December 1997. In 2000 Fitch acquired both Chicago-based Duff & Phelps Credit Rating Co. (April) and Thomson Financial BankWatch (December). Fitch Ratings is the smallest of the "big three" NRSROs, covering a more limited share of the market than S&P and Moody's, though it has grown with acquisitions and frequently positions itself as a "tiebreaker" when the other two agencies have ratings similar, but not equal, in scale. In September 2011, Fitch Group announced the sale of Algorithmics (risk analytics software) to IBM for $387 million.[2] The deal closed on October 21, 2011. [3] CIBIL is India's first credit information bureau. [4] Its a repository of information, which contains the credit history of commercial and consumer borrowers. CIBIL provides this information to its members in the form of credit information reports.[5]

As on September 2009, CIBIL has an information base on over 160 million consumer trades, and 4 million commercial trades which continues to grow at a fast pace and shares credit information with its 175 member base on the principle of reciprocity.[6] CIBILs members include all leading banks, financial institutions, non-banking financial companies, housing finance companies, state financial corporations and credit card companies. [2]

Credit Information Reports

The data that CIBIL collects is used in creating credit information reports, also known as CIRs. These reports contain; basic borrower information (such as names, DOB's and addresses), past payment history, overdue amounts, records of all the credit facilities availed by the borrower, suit-filed status and number of inquiries made on that borrower, by different Members . The Japan Credit Rating Agency (JCR) is a Japanese financial services company which publishes credit ratings to Japanese companies, local governments, and other interested parties. The company is one of the Japanese credit rating agencies which the Japanese financial service agency has approved as eligible for Japanese local banks to utilize under the Basel II framework. (Redirected from Moody's Investors Service) Moody's Corporation

Type

Public

Traded as Founded Headquarters Revenue Operating income Net income Website

NYSE: MCO New York City (1909) 7 World Trade Center, New York City $2.032 billion (2010) $772.8 million (2010) $507.8 million (2010) moodys.com References: [1]

Moody's Corporation (NYSE: MCO) is the holding company for Moody's Analytics and Moody's Investors Service, a credit rating agency which performs international financial research and analysis on commercial and government entities. The company also ranks the creditworthiness of borrowers using a standardized ratings scale. It is one of the Big Three credit rating agencies and has a 40% share of the world market, as does its main rival, Standard & Poor's;[2] Fitch Ratings has a smaller share.[3] Moody's was founded in 1909 by John Moody. The top institutional owner and only shareholder holding more than 5Credit rating agencies such as Moody's have been subject to criticism in the wake of large losses in the asset-backed security collateralized debt obligation (ABS CDO) market that occurred despite being assigned top ratings by the credit rating agencies. For instance, losses on $340.7 million worth of ABS collateralized debt obligations (CDO) issued by Credit Suisse Group added up to about $125 million, despite being rated AAA by Moody's.[8] Similarly, large companies such as Bear Stearns and Lehman Brothers had AAA and AA rating until they went bankrupt in 2008.[9]

[edit] Power and influence

% of all shares of Moody's is Warren Buffett's company Berkshire Hathaway, holding a share of ~13%.[4]

Rapid Ratings is an independent ratings, research and analytics firm that provides Financial Health Ratings (FHRs) on more than 5,000 public and private companies in 31 industry sectors, including financial services. Our proprietary ratings approach has been proven to be much earlier in identifying default risk than both traditional ratings approaches and typical default prediction models. Our work is used widely by Fortune 1000 companies, small to medium sized enterprises (SMEs) and Buy and Sell side financial institutions. It is these subscribers, rather than the companies we rate, who pay our fees and keep us free of even the appearance of conflict of interest.

Rapid Ratings has developed products and solutions that enable tailored strategic application to investing, financial risk management, compliance, credit allocation and supply chain risk management. Standard & Poor's (S&P) is a United States-based financial services company. It is a division of The McGraw-Hill Companies that publishes financial research and analysis on stocks and bonds. It is well known for its stock-market indices, the US-based S&P 500, the Australian S&P/ASX 200, the Canadian S&P/TSX, the Italian S&P/MIB and India's S&P CNX Nifty. The company is one of the Big Three credit-rating agencies, which also include Moody's Investor Service and Fitch Ratings.[2] Its head office is located on 55 Water Street in Lower Manhattan, New York City.[3]

The company traces its history back to 1860, with the publication by Henry Varnum Poor of History of Railroads and Canals in the United States. This book was an attempt to compile comprehensive information about the financial and operational state of U.S. railroad companies. Henry Varnum went on to establish H.V. and H.W. Poor Co. with his son, Henry William, and published annually updated versions of this book.[4][5] In 1906, Luther Lee Blake founded the Standard Statistics Bureau, with the view to providing financial information on non-railroad companies. Instead of an annually published book, Standard Statistics would use 5" x 7" cards, allowing for more frequent updates.[4] In 1941, Poor and Standard Statistics merged to become Standard & Poor's Corp. In 1966, the company was acquired by The McGraw-Hill Companies, and now encompasses the Financial Services division.[4]

Credit ratings
As a credit-rating agency (CRA), the company issues credit ratings for the debt of public and private corporations. It is one of several CRAs that have been designated a nationally recognized statistical rating organization by the U.S. Securities and Exchange Commission. It issues both short-term and long-term credit ratings.
[edit] Long-term credit ratings

Sovereigns listings by Standard & Poor's as of August 2011.[6][7]

The company rates borrowers on a scale from AAA to D. Intermediate ratings are offered at each level between AA and CCC (e.g., BBB+, BBB and BBB-). For some borrowers, the company

may also offer guidance (termed a "credit watch") as to whether it is likely to be upgraded (positive), downgraded (negative) or uncertain (neutral).
Short-term issue credit ratings

The company rates specific issues on a scale from A-1 to D. Within the A-1 category it can be designated with a plus sign (+). This indicates that the issuer's commitment to meet its obligation is very strong. Country risk and currency of repayment of the obligor to meet the issue obligation are factored into the credit analysis and reflected in the issue rating