BANKING AFFAIRS

Detailed explanation-1: -In India, the issuer company pays for the credit rating. 12. Who regulates rating agencies? Credit rating agencies are regulated by SEBI.

Detailed explanation-2: -Credit ratings for companies and governments are calculated by a credit rating agency such as S&P Global, Moody’s, or Fitch Ratings. These rating agencies are paid by the entity seeking a credit rating for itself or one of its debt issues.

Detailed explanation-3: -Issuer Credit Ratings: A Standard & Poor’s issuer credit rating is a forward-looking opinion about an obligor’s overall creditworthiness. This opinion focuses on the obligor’s capacity and willingness to meet its financial commitments as they come due.

Detailed explanation-4: -"Participants in the securitization industry realized that they needed to secure favorable credit ratings in order to sell structured products to investors. Investment banks therefore paid handsome fees to the rating agencies to obtain the desired ratings."

Detailed explanation-5: -Credit rating agencies can give a credit risk rating to individual companies, stocks, government, corporate or municipal bonds, mortgage-backed securities, credit default swaps and collateralised debt obligations. Credit risk shows how likely a borrower is to default on their obligations to repay a loan.