What is rating?

Rating represents an independent evaluation of ability and willingness of an entity to fulfill its future liabilities. Ability is represented by objective factors and willingness is represented by subjective factors.

What the rating is?

The rating represents an independent evaluation of ability and willingness of an entity to fulfill its future liabilities. Ability is represented by objective factors and willingness is represented by subjective factors.

 The rating is a standard product of financial and capital markets indicating the risk of a profile of the entity acting on the market and also it indicates the risk to be faced when executing any transaction within this entity. The rating aims at objectification and categorization of risks.

 Within the international scale the rating is a product with almost 100 years of history. In Slovakia it started to be used at the end of nineties of the previous century.

 Within its range of its service ERA currently provides rating analysis of:

  • Municipal entities
  • Non-financial institutions and government related entities (GRE)
  • Sovereign
  • Multilateral Financial Institutions (MFI)

 Rating scale

The risk of an entity, transaction, emission or a project is indicated by means of a rating scale, while rating agencies make use of international scales that are identical or differ in very minor divergences. Differences may consist in a so-called local rating.

To whom the rating is important?

 Receivers of information related to rating are represented mainly by parties acting on capital and financial markets, i.e. investors (banks, investment companies and minor investors), creditors, analysts, i.e. entities that are in transactional dependency with respect to the evaluated entity.

 However the rating plays an important role even for the evaluated entity since it provides it with independent information related to its position comparing with other entities acting on the market.

 The rating shall be valid for the period of one year. But during this period the rating can be modified or revised based on a regular monitoring of the entity, issue or project.