Securities’ Credit Rating Indicators and their Implications for Investment
Prof. Magdy Shehab
Professor of Public Finance and Economics
Kuwait International Law School
Abstract:
The study aims to determine the content of the credit rating of securities, focusing mainly on addressing the repercussions that the credit rating can achieve on investment. The study attempts to answer a number of urgent questions in this regard, including the question about the criteria and indicators of credit rating for securities, agencies which are doing them, as well as the securities subject to this classification.
The study shows the indicators provided by these agencies, which express the degree of solvency or merit, i.e. an assessment of the experience of some specialized commercial agencies aimed to show the financial capabilities of the company or person, their credit for the loan and their ability to repay it.
Among the most prominent agencies that exercise credit rating activities at the present time, at the local and international levels are Standard & Poor’s, Moody’s, and Fitch.
This study aims to clarify the positive functions of the credit rating indicators, what they can achieve for investment and the soundness of decisions that can be taken in this field. It also goes further to addressing the shortcomings that can be directed to the management of credit rating agencies.
Key words: credit rating, credit rating index, credit rating agencies, securities.