What do the credit ratings on bonds mean?

Public Comments

1. Credit rating is done by specialised agencies such as CRISIL, ICRA, CARE, Fitch, etc. Crediting rating on bonds is the assessment of the credit worthiness of corporations. That is the ability of the borrower company to repay its borrowing. It is done based on a number of factors, such as history of borrowing and repayment, the present financial soundness as well as the availability of assets and extent of liabilities, the purpose of the project, its feasibility, return or profitability risk of default, etc. etc.. Credit rating is important because the companies only then can attract investors. Companies with poor rating will have difficulty finding financing, and will have to pay more interest to attract the investment.