If Indian companies were to be assessed at global standard, most of them would be rated between 'BBB' and 'D', said credit rating agency CRISIL.

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"If 32,500 rated Indian companies were to be assessed on the global scale, most companies will be rated between 'BBB' and 'D' category on the global scale because India's sovereign rating will usually serve as a ceiling," it said.

A credit rating can be assigned to any entity that seeks to borrow money- an individual, corporation, state or sovereign government. Credit assessment is done by credit rating agencies such as Standard & Poor's (S&P), Moody's or Fitch. CRISIL's majority shareholder is S&P.

According to CRISIL's rating, 'AAA' rating is considered to have the highest degree of safety regarding timely servicing of financial obligations. 'AAA' carries the lowest credit risk. 'BBB' is considered to have moderate degree of safety and carries moderate credit risk. 'D' rating are in default or are expected to be in default soon.

CRISIL in its press release said that the Indian rating agencies assigned 'AAA' ratings to 275 companies while global rating agencies like Moody's and S&P assigned 'AAA' rating to only 53 and 9 companies, respectively.

However, CRISIL said that the 'AAA' ratings assigned by the credit rating agencies, both, domestic and international ones, cannot be compared as they are done on different scales and are relative to a country's rating of credit risk.

AAAs in India make up for only 0.85 percent of the overall rated universe, it further said, adding that it is lower compared to countries such as China and South Korea.

For a firm to get AAA rating, the balance sheet has to withstand stress on a world scale and steer through complex international business environment. In developed nations, firms relied more on debt to increase shareholders' value.

The agency also said the quality of ratings on any scale is best judged by the default and stability rates of the ratings, rather than the absolute number of AAAs.

First Published:Feb 27, 2019 9:51 AM IST