8enef|ts of Cred|t kat|ng to Investors

1he advanLages lmporLance or beneflLs of credlL raLlng Lo Lhe lnvesLors are

1 e|ps |n Investment Dec|s|on CredlL raLlng glves an ldea Lo Lhe lnvesLors abouL Lhe credlblllLy
of Lhe lssuer company and Lhe rlsk facLor aLLached Lo a parLlcular lnsLrumenL So Lhe lnvesLors
can declde wheLher Lo lnvesL ln such companles or noL Plgher Lhe raLlng Lhe more wlll be Lhe
wllllngness Lo lnvesL ln Lhese lnsLrumenLs and vlseversa
2 8enef|ts of kat|ng kev|ews 1he raLlng agency regularly revlews Lhe raLlng glven Lo a parLlcular
lnsLrumenL So Lhe presenL lnvesLors can declde wheLher Lo keep Lhe lnsLrumenL or Lo sell lL
lor eg lf Lhe lnsLrumenL ls downgraded Lhen Lhe lnvesLor may declde Lo sell lL and lf Lhe raLlng
ls malnLalned or upgraded he may declde Lo keep Lhe lnsLrumenL unLll Lhe nexL raLlng or
maLurlLy
3 ssurance of Safety Plgh credlL raLlng glves assurance Lo Lhe lnvesLors abouL Lhe safeLy of Lhe
lnsLrumenL and mlnlmum rlsk of bankrupLcy 1he companles whlch geL a hlgh raLlng for Lhelr
lnsLrumenLs wlll Lry Lo malnLaln healLhy flnanclal dlsclpllne 1hls wlll proLecL Lhem from
bankrupLcy So Lhe lnvesLors wlll be safe
4 asy Understandab|||ty of Investment roposa| 1he raLlng agencles glves raLlng symbols Lo Lhe
lnsLrumenL whlch can be easlly undersLood by lnvesLors 1hls helps Lhem Lo undersLand Lhe
lnvesLmenL proposal of an lssuer company lor eg AAA (1rlple A) glven by C8lSlL for
debenLures ensures hlghesL safeLy whereas debenLures raLed u are ln defaulL or expecL Lo
defaulL on maLurlLy
3 Cho|ce of Instruments CredlL raLlng enables an lnvesLor Lo selecL a parLlcular lnsLrumenL from
many alLernaLlves avallable 1hls cholce depends upon Lhe safeLy or rlsk of Lhe lnsLrumenL
6 Saves Investors 1|me and ffort CredlL raLlngs enable an lnvesLor Lo hls save Llme and efforL ln
analyzlng Lhe flnanclal sLrengLh of an lssuer company 1hls ls because Lhe lnvesLor can depend
on Lhe raLlng done by professlonal raLlng agency ln order Lo Lake an lnvesLmenL declslon Pe
need noL wasLe hls Llme and efforL Lo collecL and analyse Lhe flnanclal lnformaLlon abouL Lhe
credlL sLandlng of Lhe lssuer company

8enef|ts of Cred|t kat|ng to Company
1he merlLs advanLages beneflLs of credlL raLlng Lo Lhe lssulng company are
1 Improves Corporate Image CredlL raLlng helps Lo lmprove Lhe corporaLe lmage of a company
Plgh credlL raLlng creaLes confldence and LrusL ln Lhe mlnds of Lhe lnvesLors abouL Lhe company
1herefore Lhe company en[oys a good corporaLe lmage ln Lhe markeL
2 owers Cost of 8orrow|ng Companles LhaL have hlgh credlL raLlng for Lhelr debL lnsLrumenLs
wlll geL funds aL lower cosLs from Lhe markeL Plgh raLlng wlll enable Lhe company Lo offer low
lnLeresL raLes on flxed deposlLs debenLures and oLher debL securlLles 1he lnvesLors wlll accepL
low lnLeresL raLes because Lhey prefer low rlsk lnsLrumenLs A company wlLh hlgh raLlng for lLs
lnsLrumenLs can reduce Lhe cosL of publlc lssue Lo ralse funds because lL need noL spend heavlly
on adverLlslng for aLLracLlng lnvesLors
3 J|der ud|ence for 8orrow|ng A company wlLh hlgh raLlng for lLs lnsLrumenLs can geL a wlder
audlence for borrowlng lL can approach flnanclal lnsLlLuLlons banks lnvesLlng companles 1hls
ls because Lhe credlL raLlngs are easlly undersLood noL only by Lhe flnanclal lnsLlLuLlons and
banks buL also by Lhe general publlc
4 ood for Nonopu|ar Compan|es CredlL raLlng ls beneflclal Lo Lhe nonpopular companles
such as closelyheld companles lf Lhe credlL raLlng ls good Lhe publlc wlll lnvesL ln Lhese
companles even lf Lhey do noL know Lhese companles
3 ct as a Market|ng 1oo| CredlL raLlng noL only helps Lo develop a good lmage of Lhe company
among Lhe lnvesLors buL also among Lhe cusLomers dealers suppllers eLc Plgh credlL raLlng
can acL as a markeLlng Lool Lo develop confldence ln Lhe mlnds of cusLomers dealer suppllers
eLc
6 e|ps |n rowth and pans|on CredlL raLlng enables a company Lo grow and expand 1hls ls
because beLLer credlL raLlng wlll enable a company Lo geL flnance easlly for growLh and
expanslon