Monday, September 3, 2007

Credit ratings play a crucial role in the development of the capital markets

‘Investors do not have any financial claim over the rating agency’
In the ongoing subprime drama, rating agencies are key players, coming under heavy fire. Serious doubts are being raised, both in the US and elsewhere, whether the rating agencies could have alerted investors and thus averted the massive losses, rather than give good ratings to the subprime mortgage loans. Significantly, Ms Kathleen Corbet, president of Standard & Poor’s, a leading global credit rating company, resigned a few days ago, making way for Mr Deven Sharma.

Just the right time for a zero-base on rating, which is why Business Line interacted with Mr N. Muthuraman , Director, Criteria and Product Development, CRISIL, for answers to a few basic questions about rating.
An engineer and a management graduate from IIM, Bangalore, Mr N. Muthuraman has, over his decade-long stint with CRISIL, handled credit rating assignments across various sectors including automobiles, auto ancillaries, general engineering, chemicals, petrochemicals, shipping, media and FMCG industries.

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