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Finance Dictionary

Credit Rating

An assessment of a borrower's ability to repay debt, issued by agencies such as CRISIL and ICRA in India or Moody's and S&P globally. Ratings run from AAA (strongest) down to D (default), and directly affect the interest a borrower must pay.

Example

A debt fund holding AAA-rated paper yields less than one holding AA paper, because investors accept lower returns for lower default risk.

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