Debt Ratings

Recent Ratings:

  • What are Corporate Debt Ratings?
  • Methodology
  • Process
  • Rating symbols and definitions

CARE Ratings undertakes credit rating of all types of debt instruments. These include all medium and long-term debt securities such as debentures, bonds (including convertible bonds) and fixed deposits, as well as short-term debt and deposit obligations like commercial paper, inter-corporate deposits and certificates of deposit.

CARE undertakes rating exercise based on information provided by the entity, in-house database and data from other sources that CARE considers reliable. CARE undertakes only solicited ratings.

The primary focus of the rating exercise is to assess future cash generation capability and their adequacy to meet debt obligations in the future. The analysis therefore attempts to determine the fundamentals of the business and the probabilities of change in these fundamentals, which could affect the creditworthiness of the borrower.

The analytical framework of CARE's rating methodology is divided into two interdependent segments. The first deals with the operational characteristics and the second with the financial characteristics. Besides quantitative factors, qualitative aspects like assessment of management capabilities play a very important role in arriving at the rating for an instrument. The relative importance of qualitative and quantitative components of the analysis varies with the type of issuer. Rating determination is a matter of experienced and holistic judgement, based on the relevant quantitative and qualitative factors affecting the credit quality of the issuer.


Manufacturing entities

CARE's rating process for manufacturing entities begins with the evaluation of the economy/industry in which the entity operates, followed by the assessment of the business risk factors specific to the entity. This is followed by an assessment of the financial and project-related risk factors as well as the quality of management. Assessing liquidity and financial flexibility of the issuer gains more prominence while arriving at short term ratings apart from the basic fundamental credit analysis of an issuer.


Banks, NBFCs and Financial Institutions

For arriving at the rating of Banks, NBFCs and Financial Institutions CARE evaluates the economy/industry in which the institution operates, followed by the assessment of the business fundamentals of the institution using the 'CRAMELS' model which stands for:

C -capital adequacy
R -Resource raising ability
A - Asset quality
M -Management quality
E -Earnings quality
L -Liquidity
S -Systems


CARE has also developed rating methodologies specific to various sectors. These methodologies attempt to point out factors, over and above those mentioned in the broad methodology, which are considered while analyzing companies belonging to a particular sector.

For detailed rating methodologies please click here

A. Long / Medium-term Instruments (FD/SO/CPS/RPS)

Symbols Rating Definition
CARE AAA Instruments with this rating are considered to have the highest degree of safety regarding timely servicing of financial obligations. Such instruments carry lowest credit risk.
CARE AA Instruments with this rating are considered to have high degree of safety regarding timely servicing of financial obligations. Such instruments carry very low credit risk.
CARE A Instruments with this rating are considered to have adequate degree of safety regarding timely servicing of financial obligations. Such instruments carry low credit risk.
CARE BBB Instruments with this rating are considered to have moderate degree of safety regarding timely servicing of financial obligations. Such instruments carry moderate credit risk.
CARE BB Instruments with this rating are considered to have moderate risk of default regarding timely servicing of financial obligations.
CARE B Instruments with this rating are considered to have high risk of default regarding timely servicing of financial obligations.
CARE C Instruments with this rating are considered to have very high risk of default regarding timely servicing of financial obligations.
CARE D Instruments with this rating are in default or are expected to be in default soon

Modifiers {"+" (plus) / "-"(minus)}can be used with the rating symbols for the categories CARE AA to CARE C. The modifiers reflect the comparative standing within the category.

B. Short-term Instruments (SO/CPS/RPS)

Symbols Rating Definition
CARE A1 Instruments with this rating are considered to have very strong degree of safety regarding timely payment of financial obligations. Such instruments carry lowest credit risk.
CARE A2 Instruments with this rating are considered to have strong degree of safety regarding timely payment of financial obligations. Such instruments carry low credit risk.
CARE A3 Instruments with this rating are considered to have moderate degree of safety regarding timely payment of financial obligations. Such instruments carry higher credit risk as compared to instruments rated in the two higher categories.
CARE A4 Instruments with this rating are considered to have minimal degree of safety regarding timely payment of financial obligations. Such instruments carry very high credit risk and are susceptible to default.
CARE D Instruments with this rating are in default or expected to be in default on maturity.

Modifier {"+" (plus)}can be used with the rating symbols for the categories CARE A1 to CARE A4. The modifier reflects the comparative standing within the category.

Note :

FD Fixed Deposit
SO Structured Obligations
CPS Convertible Preference Shares
RPS Redeemable Preference Shares
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