Imarticus Learning
India’s leading professional education institute, offering certified industry-endorsed training in Financial Services, Investment Banking, Business Analysis, IT, Business Analytics & Wealth Management
Credit Analysis in simple terms is basically referred to as a type of analysis procedure which is most often opted by an investment banker or a portfolio manager. These professionals, when perform this procedure, they usually deal with examining the ability of various financial institutions in keeping with meeting the demands of its debt obligations. The various entities that this procedure usually involves is being able to identify the appropriate level of default risk, which is associated with the investments that are potentially going to go into that particular entity.
The whole process of credit analysis involves a lot of varied type of proceedings, the first of which begins with identification of the firms that are supposedly going to experience a change in their debt rating. On the basis of this then, the financial analyst gets to decide what kind of changes if followed will result into the profits and dividends for the individual. This helps the analyst of the investment manager to help derive what bonds that professional should purchase in order to not just achieve profits but also to ensure no loss whatsoever right before the credit ratings of the same begin to change. This credit analysis makes up for a smaller process in the larger spectrum of a field of work known as credit market, this happens to be a virtual marketplace where companies, governments and financial institutions alike, issue ‘debt’ to all the investors who make up the society. These debt instruments refer from various investment grade bonds, junk bonds, short term commercial papers, promissory notes, treasury bills and so on. This is basically what makes up this credit market, which is also sometimes popularly known as the debt market. It also involves a lot of other offerings such as notes and securitized obligations which range from various types of mortgage pools, collateralized debt obligations, dwarfs and so on. These credit markets come to be of greater use usually when these corporations and governments are in need of raising money. In lieu of earning money thus, they offer bonds in the market for all the investors to buy. These investors, when they buy the bonds usually lend money to those who are the issuers of these bonds. And when these very bonds, which happen to be timed perfectly mature, this results in these investors selling them to those who have issued them at face value and thus ultimately achieving profit. This is the very process that the portfolio managers and some of the investment banking professionals carry out for their clients. These professions have become quite popular in the recent times with more and more candidates looking to apply herein and advancing their career through various professional training courses, the likes of which are offered by institutes like Imarticus Learning.
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About ImarticusImarticus Learning is a education institute based in Mumbai. We offer certified industry-endorsed training in Financial Services, Investment Banking, Business Analysis, IT, Business Analytics & Wealth Management. Archives
December 2018
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