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Don't go by credit rating alone, consider default analysis, performances

Look up performance parameters: Investors should look up a metric called credit default analysis, available on rating agencies' websites, to compare performance vis-a-vis their peers

Investors need to fine tune investment strategy to tackle rising rates

Sanjay Kumar Singh
The recent defaults by IL&FS and its subsidiaries have shaken investors’ faith in the ratings provided by credit rating agencies. The ratings of its debt instruments plunged from AAA to D (default) within a few months. While investors who invest directly in bonds cannot ignore ratings, they do need to take a few additional precautions. 

Read the credit report: Before investing in a debt instrument, go to the concerned rating agency’s website and obtain the credit report on the borrower. This report contains the rating, which indicates where the company stands regarding  probability of repaying its dues (see box). “An

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First Published: Oct 31 2018 | 10:15 PM IST

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