How does a rating agency operate when issuers disclosure levels are low?
Standards of transparency in emerging markets have been improving in recent years. Moreover, during a rating exercise, issuers provide rating agencies with confidential information and insights into business strategy that are not normally available in the public domain, However, an experienced rating agency can arrive at a reasonably accurate credit rating based on publicly available information, peer analysis and an understanding of the industry. CRISIL believes that in an emerging market, interactions with an issuer’s management are an important and necessary feature of the credit rating exercise. As a policy, CRISIL does not assign ratings without issuer interaction except when a previously rated instrument is outstanding or when a specific investor asks for a private exercise.
