Banking and Financial News – 17 May 2014

India's Fiscal, Economic Reforms to Determine Credit Rating: S&P (NDTV Profit) - The fiscal and economic reforms taken by India's new government in the next two to three months will have "significant implications" on India's sovereign credit rating, Standard & Poor's Ratings Services said on Friday.

S&P is the only one of the three major credit agencies to have India with a "negative outlook" for its "BBB-minus" rating, meaning any downgrade would send the country to below investment grade.

Former Tisco chairman Russi Modi dies at 96 (The Mint) - Russi Mody, former chairman of Tata Steel Ltd, died in Kolkata on Friday evening, aged 96. Mody, who was educated in the UK, joined what was then Tata Iron and Steel Co., or Tisco, in 1939, and rose through the ranks to become its chairman.

“Mody was a stalwart who steered Tata Steel to become one of India’s most respected corporations,” At Tisco, he was known to be a people’s man with a great following among workers of the lowest level. Mody introduced concepts such as human resource management far ahead of time and that he was “forerunner of a technological turnaround” which made the firm a benchmark for other Indian steel makers to follow.

Important Financial Terms in the News explained.

Credit Rating: An assessment of the likelihood of an individual or business or a country being able to meet its financial obligations. Credit ratings are provided by credit rating agencies to verify the financial strength of the issuer for investors. They also rate the Instruments used by the companies to raise capital / funds and also the loans and advances they propose to raise from the Banks / FIs.

The Big Three International credit rating agencies are

1) Standard & Poor's (S&P),

2) Moody's, and

3) Fitch Group.

S&P and Moody's are based in the US, while Fitch is dual-headquartered in New York City and London. As of 2013 they hold a collective global market share of "roughly 95 percent"[1] with Moody's and Standard & Poor's having approximately 40% each, and Fitch around 15%. The norm for debt issuers is to obtain ratings from the first two, and only occasionally turn to Fitch, for example if Moody's and S&P disagree.

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Courtesy : NDTV Profit , The Mint