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Managerial Finance

Assignment: 06
Topic: Rating agencies conflict of Interest

Prepared for
Mohammad Arman, PhD
Course Instructor of BUS 635
School of Business and Economics (SBE)
North South University
Section: 04

Prepared by
Group: 04
SL Name ID Signature
1 Fairooz Tasnim Epa 1621713660
2 Md. Khadimul Islam 1521850660
3 Rana Chowdhury 1521250660
4 Md. Ziaul Haque 1521250660
5 Md. Tauhidul Islam 1530905660
Name the Big three Credit Rating Agencies in the world? Name the important types
of clients they serve?
Answer: Standard & Poors (S & P)
Moodys
Fitch Group

Standard & Poors (S & P)Clients: Trading Central


Bematech
Nasdaq
Moodys Clients: National Bank of Abu Dhabi
Fitch Group Clients: Central Bank
Investment Banks
Corporate Banks

How many local credit rating agencies are operating in Bangladesh Now? Name
those, Also name the important type of clients they serve?
Answer: 8
CRISL
CRAB
National Credit Ratings Ltd.
Emerging Credit Rating Ltd.
ARGUS credit rating services Ltd.
WASO credit rating company (BD) Limited
ALPHA credit rating limited
The Bangladesh rating agency limited

CRISL Clients: JCR Vis


ACRAA
CRAB Clients: ICRA
ACRAA
National Credit Ratings Ltd.: Pubali Bank
Emerging Credit Rating Ltd.: Bangladesh Bank
IDRA
ARGUS credit rating services Ltd.: ACRSL
WASO credit rating limited: Bangladesh Bank
BSEC
ALPHA credit rating limited: SATCOM IT limited
Axis Resources Ltd
The Bangladesh rating agency limited: SMERA

How may high credit rating help corporate/business in Bangladesh?


Answer: A credit rating evaluates the creditworthiness of a debtor, especially a Business
or corporate world. It is an evaluation made by a credit rating agency of the debtors
ability to pay back the debt and the likelihood of default. Credit rating stands for being
monetary liable and rating stands for symbolic result of evaluation. It is the process of
evaluation to someones creditworthiness. Credit Rating concept have got when Banks
fall in financial crisis. Bit by bit, it turned out to be applicable on corporate business.
Credit Rating agency started in Bangladesh since 2002. Small and Medium Business are
contributing in economic development in Bangladesh. Credit Rating plays an important
role by rating the corporate Business that reflects overall creditworthiness.

How the Credit Rating agencies regulated in Bangladesh?


Answer: Credit Rating agencies in Bangladesh are regulated in a superior way. First any
Business Institutions profitability need to justify. What about their earning process, Is it
reliable or not? Asset quality is justifiable thing to judge a Businesss creditworthiness.
How much capital they are invested in their Business? How they control their risk
management policy? Is it going with tolerable level or not? Some Business are taking
high profile risk and some are low. A Businesss Investment quality should high, they
need to justify the sector where they are investing their money and How can they retain
their profit?

Comment of the apparent Conflict of Interest in the practices of Credit Rating


Agencies?
Answer: Credit Rating agencies major job is to rating the Business, corporate or Banking
institution. If the economy is go down or up then its not their job to control the whole
thing. Credit Ratings have been embraced by financial markets because they mostly do
what agencies claim they do. Credit Rating agency play an important role when Business
institution fall in financial crisis. When company or government wants to issue debt, it
usually calls a rating agency. Rating changes for many reasons such as merger prospects,
revenue shortfalls, regulatory changes and so on. Rating agencies fall in conflict when
they comes to rating in new Business.

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