What is Credit Rating?

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Accepted Answer

A **Credit Rating** is an independent assessment of a borrower's or debt issuer's creditworthiness, representing the rating agency's opinion on the likelihood of timely principal and interest repayment. This crucial metric is used by investors, particularly in the Treasury, bond, and Real-World Asset (RWA) tokenization markets, to quantify default risk and determine appropriate pricing and investment suitability.

Credit Rating

What is Credit Rating?

What is the primary role of Credit Ratings in the Treasury and Corporate Bond markets, and how do they influence investment decisions?

How does the tokenization of Real-World Assets (RWA) utilize and potentially disrupt traditional Credit Rating mechanisms?

Why are Credit Ratings essential for determining collateral quality and haircuts in the multi-trillion-dollar Repurchase Agreement (Repo) market?

What are the key methodologies and quantitative factors used by the major agencies to determine a Credit Rating for both corporate and sovereign debt?

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