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Demand-Supply Scenario of Credit Rating Industry in India

 

Source – ZebraResearch

To understand demand side of CRAs, we need to understand the bond market & credit growth – Rating agencies make money by rating the Corp debt instruments like bonds, NCDs, FDs, etc. and rating the Bank Loans known as BLR (bank loan rating). So, their earnings are more or less driven by demand in corporate debt markets.

 

 

Demand side dynamics of ‘Corporate debt market’ –

 

Extract Source – Credit Rating Agencies By Axis Capital , Page no – 57

 

Extract Source – Credit Rating Agencies By Axis Capital , Page no – 57

 

Extract Source – Credit Rating Agencies By Axis Capital , Page no – 57

 

Public & Private Debt Issues In India –

Extract Source – Prime Database

 

CRAs represent the corporate credit market i.e. any uptick (or downfall) in the corporate credit market will be first reflected in the CRAs’ revenue.

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Growth Factors of Exchange Industry in India

Factors that indicate a healthy growth in the Exchange industry are
1. Increase in number of listed companies
2. Shift from physical assets to financial assets (eg. mutual funds)
3. Increase retail participation
4. Govt approval for EPFO to invest in equity market
5. Growth of data related business
6. Development of corporate bond market
7. Development of International Exchange

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