The Financial Sector would cover Retail and Commercial Banks, Internet Banks, Non-Banking Finance Companies, and Specialized Financial institutions.
Each of these entities share the common function of using their own funds to lend to others at a cost-plus basis, they vary significantly in their scale of operations, the range of products and services they offer, how they deliver those products, the regulatory standards they must adhere to, and the internal control systems they employ. These differences highlight the diverse approaches and operational frameworks that distinguish them from one another.
The methodology of CareEdge Global consists of two interconnected segments. The first segment focuses on operational characteristics, while the second examines financial characteristics. In addition to quantitative factors, qualitative aspects such as an assessment of management capabilities play a crucial role in determining the rating for a financial instrument. The relative importance of qualitative and quantitative components varies based on the type of issuer.
Other instruments that we rate in financial sector
Hybrid Securities
Our ratings cover hybrid securities, which combine elements of both debt and equity. These instruments are often issued by financial entities to strengthen their capital base, and our evaluations help investors understand their risk and return characteristics.
Subordinated Debt
We evaluate the credit risk of subordinated debt issued by financial institutions. This type of debt ranks below other debts in case of liquidation, and our ratings provide crucial insights into its risk profile.
Securitized Products
We offer ratings for a variety of securitized products issued by financial entities, including:
Covered Bonds
We rate covered bonds, which are debt securities backed by a separate pool of assets. These bonds offer additional security to investors, and our ratings reflect the credit quality of both the issuer and the underlying assets.
CareEdge Global predominantly employs the ‘CRAMELS’ model to assess financial sector entities. This model covers several key dimensions:
Furthermore, CareEdge Global takes industry-specific nuances into account when evaluating financial sector entities. These considerations ensure a comprehensive assessment of an issuer’s creditworthiness.
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