Credit Rating Agencies the heart of global financial systems Part.I

The key player in financial markets over the last twenty years, the CRAs (Credit Rating Agencies) best known under the name of credit rating agencies have become indispensable in providing a double service: an evaluation of the financial solvency of debt issuers (states, local governments, financial institutions, insurance companies, businesses) and participating in the decision support by assessing the financial risk of bonds. These services, summarized in a note, reflect on their own assessment of an agency and its analysts and may result in the case of a "downgrade" or "upgrade" significant repercussions on the costs loan, refinancing or the share price of a company.


Appeared in the United States, the financial rating has grown exponentially due to the internationalization of the markets. The notation is a service agency charged by the issuer and allows investors to compare the financial situation of both sectors to facilitate access to foreign markets and to rapidly assess the overall financial situation of a company. This note is an indicator of default risk, which complements the analysis from audit firms and analysts for investment banks. It allows the emitting structure to negotiate its interest rates for financing bank or bond issues.


Despite common customers and investors, the rating system is not uniform between each agency, even if harmonization has often been stressed. Each agency therefore has its own rating system that distinguishes mainly long-term debt and short-term, and divided into several layers that distinguish investment grade (High Grade) to speculative grade (speculative grade) addressed the latter mainly to investors seeking a high level of performance.