Institutional Services

ICRA A Moody's Investor Services

As an early entrant in the Credit Rating business, ICRA Limited (ICRA) is one of the most experienced Credit Rating Agencies in the country today. ICRA rates rupee-denominated debt instruments issued by manufacturing companies, commercial banks, non-banking finance companies, financial institutions, public sector undertakings and municipalities, among others.

ICRA also rates structured obligations and sector-specific debt obligations such as instruments issued by Power, Telecom and Infrastructure companies. The other services offered include Corporate Governance Rating, Stakeholder Value and Governance Rating, Credit Risk Rating of Debt Mutual Funds, Rating of Claims Paying Ability of Insurance Companies, Project Finance Rating, Line of Credit Rating and Valuation of Principal Protected-Market Linked Debentures (PP-MLD).

Project Finance Ratings

The envisaged demand for private-sector investments in infrastructure projects, particularly in the energy and road sectors, suggests considerable potential for adequately structured project finance transactions. Growth in such transactions would also be driven by the inability of many potential project sponsors to implement such capital intensive and highly leveraged projects on their balance sheets, without having their own credit risk profile materially impacted. Project financing usually involves setting up of a Special Purpose Vehicle (SPV), bound by a contractual matrix to various project participants, which raises debt and services it from its own cash flows, without recourse to its sponsors. ICRA's Rating approach emphasises the importance of carefully assessing the risks that characterise such transactions and suitably structuring the projects to mitigate the risks. It may be noted that if a project entity proposes to issue a debt instrument that requires a Credit Rating, ICRA would assign a Credit Rating on its conventional Credit Rating scale. The Project Finance Rating (PFR) service is essentially a project risk assessment exercise (with a separate PFR Rating scale) that may be useful to the project entity and its lenders/investors. ICRA would also provide a detailed assessment report on the project without assigning a formal PFR if lenders/project entities require only that. The Rating methodology involves an assessment of three broad areas:

  • Sponsor strength
  • Project risks
  • Cash flow adequacy

The Benefits

For lenders, typically financial intermediaries like banks and financial institutions, ICRA's PFRs would: Facilitate informed decision-making Provide an independent and reliable second opinion Assist in risk pricing Facilitate portfolio risk management Help meet specific investment objectives For borrowers, ICRA's PFRs may help to: Increase the comfort level with prospective/existing lenders and enhance marketability to various lenders Reduce the time involved in obtaining loan approval

Others Ratings