The economy is looking up if the stability of ratings issued by premier rating agency Icra in 2002 are anything to go by.
During 2002, all AAA-rated corporates (LAAA in Icra parlance) maintained their ratings and not one of the 28 corporates slipped. This is significant because in 2001, 12.9 per cent of the AAA-rated corporates slipped to the AA category.
In fact, ratings in all categories in 2002 were distinctly more stable than in 2001.
Icra monitors its ratings to assess the impact of macroeconomic shifts and to find a correlation between ratings and the probability of default. In the beginning of each year, the agency forms a cohort of all ratings and tracks them for the rest of the year.
In 2002, all the AAA long-term ratings maintained their position for the year, a rare feat of late. And both the AA- and A-rated (the relatively higher investment grades) issues witnessed movements to the higher category, something not seen in 2001.
