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B E N E F I T S AN D I M P O R TAN C E O F A C R E D I T R ATI N G
Since a credit rating is a third party opinion on creditworthiness, it promotes transparency and
greater disclosure in the capital market. It supplements an internal evaluation,particularly those done
by the regulators and inventors. A credit rating serves as a focused tool to differentiate credit quality.
Aside from the internal rating, it is also allows for continuous monitoring which can serve as an
update on company performance and gives a current snapshot on its credit standing.
Having a credit rating is equivalent to the issuer announcing that both the issue and the issuers have
been subjected to, and can withstand scrutiny. Generally,having a credit rating lowers the interest
rates for the issuer.
P H I L R ATI N G S ' M E T H O D O L O G Y
GENERAL CREDIT RATING METHODOLOGY
The rating process involves no black box, no formulae, and no standard group of ratios that set
minimum requirements for each rating category. The credit analysis includes a wide range of both
quantitative and qualitative factors. The weight given to each in the analysis of a particular company
varies, depending on the economies, laws and customs of the countries in which it operates,
accounting practices, the competitive situation, and the regulatory environment. When analyzing
corporate issuers, two major areas are addressed: business risk and financial risk. Both cover a
range of broad categories. The following factors provide some flavor as to the issues analyzed and