Credit Rating and its Implications

Credit rating gives the future prospects about the credit worthiness of the borrower in respect of the specific financial obligation.

Credit rating tells creditors about the risk attached with the debt financial instruments which they intend to buy. Better the rank lesser is the risk.Credit ratings are issued by credit rating agencies, major rating agencies are- Standard & Poor’s, Fitch, Moody’s are few prominent rating agencies.

Credit Rating	Opinion
AAA	Extremely  Strong capacity to meet the financial commitments(Highest rating)
AA	Very Strong capacity to meet the financial commitments
A	Strong capacity to meet financial commitments but subject to adverse economic conditions
BBB	Adequate capacity to meet financial commitments but subject to adverse economic conditions
BB	Currently OK but less vulnerable to adverse business, financial and economic condition
B	Currently OK but more vulnerable to adverse business, financial and economic condition
CCC	Currently Vulnerable and dependent on business, financial and economic conditions
CC	Currently Highly Vulnerable
C	Currently Highly Vulnerable and under other defined circumstances
D	Payment Default on financial Commitments

Note: + and - sign are used to show relative standing within the major category