Benefits of Credit Rating to Investors
The advantages, importance or benefits of credit rating to the investors are:-
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- Helps inwards Investment Decision : Credit rating gives an thought to the investors nigh the credibility of the issuer company, in addition to the direct a opportunity percentage attached to a item instrument. So the investors tin create upward one's heed whether to invest inwards such companies or not. Higher the rating, the to a greater extent than volition hold upward the willingness to invest inwards these instruments in addition to vise-versa.
- Benefits of Rating Reviews : The rating way regularly reviews the rating given to a item instrument. So, the acquaint investors tin create upward one's heed whether to continue the musical instrument or to sell it. For e.g. if the musical instrument is downgraded, thence the investor may create upward one's heed to sell it in addition to if the rating is maintained or upgraded, he may create upward one's heed to continue the musical instrument until the adjacent rating or maturity.
- Assurance of Safety : High credit rating gives assurance to the investors nigh the security of the musical instrument in addition to minimum direct a opportunity of bankruptcy. The companies which teach a high rating for their instruments, volition attempt to hold well for y'all fiscal discipline. This volition protect them from bankruptcy. So the investors volition hold upward safe.
- Easy Understandability of Investment Proposal : The rating agencies gives rating symbols to the instrument, which tin hold upward easily understood yesteryear investors. This helps them to empathize the investment proposal of an issuer company. For e.g. AAA (Triple A), given yesteryear CRISIL for debentures ensures highest safety, whereas debentures rated D are inwards default or await to default on maturity.
- Choice of Instruments : Credit rating enables an investor to direct a item musical instrument from many alternatives available. This selection depends upon the security or direct a opportunity of the instrument.
- Saves Investor's Time in addition to Effort : Credit ratings enable an investor to his salve fourth dimension in addition to endeavour inwards analyzing the fiscal forcefulness of an issuer company. This is because the investor tin depend on the rating done yesteryear professional person rating agency, inwards society to convey an investment decision. He require non waste matter his fourth dimension in addition to endeavour to collect in addition to analyse the fiscal data nigh the credit standing of the issuer company.
Benefits of Credit Rating to Company
The merits, advantages, benefits of credit rating to the issuing society are:-
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- Improves Corporate Image : Credit rating helps to improve the corporate ikon of a company. High credit rating creates confidence in addition to trust inwards the minds of the investors nigh the company. Therefore, the society enjoys a skilful corporate ikon inwards the market.
- Lowers Cost of Borrowing : Companies that receive got high credit rating for their debt instruments volition teach funds at lower costs from the market. High rating volition enable the society to offering depression involvement rates on fixed deposits, debentures in addition to other debt securities. The investors volition convey depression involvement rates because they prefer depression direct a opportunity instruments. H5N1 society alongside high rating for its instruments tin cut the terms of world upshot to heighten funds, because it require non pass heavily on advertising for attracting investors.
- Wider Audience for Borrowing : H5N1 society alongside high rating for its instruments tin teach a wider audience for borrowing. It tin approach fiscal institutions, banks, investing companies. This is because the credit ratings are easily understood non exclusively yesteryear the fiscal institutions in addition to banks, precisely also yesteryear the full general public.
- Good for Non-Popular Companies : Credit rating is beneficial to the non-popular companies, such every bit closely-held companies. If the credit rating is good, Earth volition invest inwards these companies, fifty-fifty if they produce non know these companies.
- Act every bit a Marketing Tool : Credit rating non exclusively helps to prepare a skilful ikon of the society amidst the investors, precisely also amidst the customers, dealers, suppliers, etc. High credit rating tin deed every bit a marketing tool to prepare confidence inwards the minds of customers, dealer, suppliers, etc.
- Helps inwards Growth in addition to Expansion : Credit rating enables a society to grow in addition to expand. This is because amend credit rating volition enable a society to teach finance easily for increase in addition to expansion.
