Credit rating is a qualified assessment and formal evaluation of a company's credit history and capability of repaying obligations. It measures the default probability of the borrower, and its ability to repay fully and timely its financial debt obligations.
Generally, international rating agencies assign short-term and long-term credit ratings.
Short-term rating gives the benchmark of the likelihood of borrower's default within one year.
Long-term rating evaluates the likelihood of default over longer time (up to the lifetime of the securities issued).
For credit rating agencies to contribute to the development of capital markets governments' have to establish the building blocks and an enabling environment for the capital market to function. The challenge for CMDA is to create the infrastructure and an environment where ratings can make a meaningful contribution.
