Why credit rating is important?

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These ratings play a crucial role not only for the rated countries but for all other countries; a downgrading or upgrading has the immediate effect of making a country"s borrowing more expensive or cheaper, it makes states weaker or stronger.

Credit ratings also play a useful role in enabling corporations and governments to raise money in the capital markets.

Instead of taking a loan from a bank, these entities sometimes borrow money directly from investors by issuing bonds or notes.

Investors purchase these debt securities, such as municipal bonds or treasury securities on the basis of ratings given by credit rating agencies.

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