Credit rating offers investors such as those in private equity, venture capital, investment banks, development banks, corporate as well as SME finance, a powerful way to quicken appraisal and get to the decision point faster and cost effectively.
Based on staff time, we estimate that ratings can reduce the cost of appraising an investment or lending by as much as 50% for corporates and 80% for SMEs. Rating agencies and their cousins credit reference bureaus are licensed for precisely this reason. They achieve it by reducing the information asymmetry. They do so by collecting huge masses of data, constantly analyzing it, and making it available for the investment professionals to use.
At the Metropol Corporation, we produce and update over a hundred industry and sector reports. In addition, we are also producing economic forecasts at the national and county levels. Credit referencing and the sharing of full file information has made it possible to obtain credit scores for individuals and credit profiles for companies.
Bringing all these elements together into a single credit rating is a rigorous, intensive and regulated process.