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Pricing Power of Credit Rating Industry In India

Source – ZebraResearch

Source – ZebraResearch, Alpha Investor

‘Does cost of getting rated really matters in credit rating business?

  • Except for some SMEs, who might think it’s a complete wastage to spend on getting a stamp on the paper, it really doesn’t matter. The pricing structure for Credit Rating is ‘roughly’ 0.1% for initial fees and 0.03% for surveillance fees. 
  • For large corporates and banks whose borrowing ability and credit costs depend on the kind of ratings they get, fees don’t really matter as much as ratings do. That’s why rate shopping becomes an important factor in the selection process.

What matters in the credit rating space is –

Source – ZebraResearch

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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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