How vital are ratings of a company by agencies?

Oct 26, 2013, 05.41 PM IST

According to Vijai Mantri, MD & CEO of Pramerica Mutual Fund, The rating agency will give you rating at that time on the basis of information available to them so, AAA rating means the highest safety. But that is on the basis of that information.

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How vital are ratings of a company by agencies?

According to Vijai Mantri, MD & CEO of Pramerica Mutual Fund, The rating agency will give you rating at that time on the basis of information available to them so, AAA rating means the highest safety. But that is on the basis of that information.

Like this story, share it with millions of investors on M3

How vital are ratings of a company by agencies?

According to Vijai Mantri, MD & CEO of Pramerica Mutual Fund, The rating agency will give you rating at that time on the basis of information available to them so, AAA rating means the highest safety. But that is on the basis of that information.

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Q: Guide us a little bit about debt rating agencies, bond rating agencies. Very often we see AAA, A, BB or BA what does it really mean and how noteworthy are all of these? How much cognizance should I take that okay this is the rating on this bond, it means my money is safe. I don't need to ask any more questions is that ever the case?

A: The rating agency will give you rating at that time on the basis of information available to them so, AAA rating means the highest safety. But that is on the basis of that information. Go five years back, most of the infrastructure company had highest rating and today these companies are not doing too well so, a customer who is investing directly in bond or directly in the deposit run that risk.

Suppose, the same money come through mutual fund at least you can exit any time because you can look at the portfolio. Portfolio has 20-30 names, you have a company deposit, you have a company bond, you have a bank CD, G-Sec everything in the portfolio so one invest in a well diversified portfolio.

Third, the reliability of the rating agency in my opinion anywhere in the world is not very high. That is the beginning. That is not the end of investing, that is the beginning of investing. You look at the good rating then you do your investigation. Suppose you can't do your investigation you should not manage your money directly.

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