The credit rating of an entity is not permanent. The assessment is continuous in nature. Hence, when the agencies upgrade a company’s credit rating, it implies that the company now has a better chance of repaying the loan than before. Alternatively, a
reduced credit rating implies that the repayment capability has reduced.
Knowing the credit rating of these instruments can help you in many ways
1. It tells you about the creditworthiness of the borrower
2. It can help you determine a suitable debt fund for investment, given your goals, risk appetite, etc.
3. The borrowers are continuously thriving to improve their credit rating because it increases their borrowing capacity.