PACRA rating process

[SalmanShehzad]

AOA
Hi Every one…
How are you all doing…I just want to ask few things regarding the credit rating agency (PACRA). When PACRA is rating any debt instruments what are the things which it consider to rate that debt instrument. I mean for audit auditors have that audit program (kind of check list) so they any one of you have any knowledge of any such program for credit rating.
I know few things which they consider that are as following
1.The financial condition of the company
2.then they also study the terms and condition of current loans of the company
3.Also they study in detail why do they need loan and what is the company condition s to pay back the loan . etc etc

But I am looking for any check list or any rating program which I can follow if I want to rate a company my self just to see how credit rating agencies work.

I will also appreciate if any one of u can mention the advantages of this Rating for the companies. I know they are restricted by law if they want to issue a public debt but still what are the advantages. I know few but want to know more..

Looking forward to positive reply from you all the way you did when last time i asked question related to "Accounting Standards in Pakistan"


Thanks and Regards

Salman Shehzad
Lecturer
Mohammad Ali Jinnah University,
Islamabad Campus.
Phone 92-51-111-87-87-87 Ext 115
Mobile 92-303-7777237
www.jinnah.edu.pk

[CBPian]

Every credit rating agency CRA has its own algorithm to rate an instrument, entity or a country. The tools used include past and current financial data, cashflows of the company, its relative standing, environment assessment and a host of other variables which are factored as risk weights. I do not think you can use some checklist or formulae to arrive at the same rating given by a certain CRA due to the fact that these are kept confidential and the alphabet assignment is merely a matter of choice of the CRA, however one can perform one's own rating by looking at various factors affecting the issue of the instrument and the entity's ability to service the debt.
Have a look at this informative article
http//www.icraindia.com/services/rating/r-credit.htm#1
you can also visit S&P and Moody's websites to view various credit ratings and legends to rating assignments.

[SalmanShehzad]

AOA
Dear

Thanks a lot for your reply. I thought I will not get the reply to this query lol. I have studied the article, which is full of information, and I think that along with few other resources helped me to prepare my own check list kind of the thing that what are the things which we have to calculate. But the real issue is to prepare the categories with the help of which we will see that what is the rating of the company. But I hope I will be able to do it.
Once again thanks a lot for ur support



Thanks and Regards

Salman Shehzad
Lecturer
Mohammad Ali Jinnah University,
Islamabad Campus.
Phone 92-51-111-87-87-87 Ext 115
Mobile 92-303-7777237
www.jinnah.edu.pk