What a Credit Rating Means for Bangladeshi Corporations

In today’s increasingly globalized financial markets, credit ratings play a crucial role in determining a company’s access to funding, investor confidence, and long-term sustainability. For Bangladeshi corporations aiming to expand domestically or abroad, understanding and maintaining a solid credit rating is more important than ever.

This article breaks down what credit ratings are, how they are determined, and why they matter specifically for corporations in Bangladesh—particularly those seeking to tap into bond markets, attract FDI, or secure cross-border trade financing.

📘 What is a Credit Rating?

A credit rating is an evaluation of a company’s ability to meet its financial obligations. Issued by rating agencies, it provides an independent opinion on the creditworthiness of an entity or financial instrument (like corporate bonds).

There are two types:

• Issuer Ratings: Reflect the overall credit profile of a company.

• Issue Ratings: Assess specific debt instruments (e.g. bonds).

These ratings are usually categorized as:

• Investment Grade (e.g., AAA to BBB)

• Speculative or Junk Grade (BB and below)

📈 Why Credit Ratings Matter for Bangladeshi Corporations

1. Access to Capital Markets

A strong credit rating opens doors for Bangladeshi corporations to raise funds through bonds or syndicated loans at lower interest rates. For example, Grameenphone, the largest mobile operator in Bangladesh, secured international financing thanks to its favorable credit profile.

🔗 Bangladesh Bank Corporate Bond Guidelines: BB Circular on Bonds

2. Investor Confidence

Investors—both local and international—heavily rely on credit ratings when making decisions. A favorable rating gives institutional investors confidence in the stability and governance of a firm.

✅ A-rated corporations often enjoy broader shareholder interest, including foreign portfolio investors (FPIs).

3. Supplier and Vendor Trust

Suppliers offering extended credit terms look at a company’s financial health. A favorable rating reassures vendors of timely payments, making supply chain financing smoother and more efficient.

🧮 How Credit Ratings Are Assigned in Bangladesh

In Bangladesh, Credit Rating Agencies (CRAs) operate under the oversight of the Bangladesh Securities and Exchange Commission (BSEC) and follow international best practices.

Top Local CRAs:

• CRAB (Credit Rating Agency of Bangladesh)

• Emerging Credit Rating Ltd. (ECRL)

• Alpha Credit Rating Ltd. (AlphaRating)

These agencies assess factors like:

Companies are required to submit audited financials, cash flow statements, and operational details during the rating process.

🏦 Benefits of a Strong Credit Rating in Bangladesh

⚠️ Risks of a Poor or No Credit Rating

1. Difficulty in Securing Loans
   Financial institutions may hesitate to lend or offer unfavorable terms.

2. Limited Market Access
   Corporations without ratings cannot list debt instruments on the bond market.

3. Weakened Reputation
   Poor ratings may lead to negative perceptions in the media and among stakeholders.

📊 Credit Rating Example – RMG Sector

A leading RMG exporter based in Narayanganj received a BBB+ rating from CRAB. As a result, it was able to:

• Issue a Tk 150 crore corporate bond at competitive rates

• Expand its machinery with supplier credit from Europe

• Build trust with new buyers in the U.S. and Canada

📌 How to Improve Corporate Credit Ratings

Here are strategic steps to boost your company’s creditworthiness:

1. Maintain Clean Financial Records – Timely audits and clear reporting

2. Diversify Revenue Streams – Reduce reliance on one market

3. Enhance Governance – Create independent audit and risk committees

4. Build Liquidity Buffers – Maintain healthy current ratios

5. Avoid Defaults or Delays – Even on small obligations

🚀 The Future of Credit Ratings in Bangladesh

As Bangladesh gears toward becoming a developed economy by 2041, the capital market will play a central role. Companies in sectors like infrastructure, logistics, fintech, and healthcare are increasingly turning to bonds and other instruments.

🔗 Read: Bangladesh Vision 2041 – Perspective Plan

Expect more transparency, mandatory disclosures, and international collaboration in the credit rating landscape.

✅ Conclusion

For Bangladeshi corporations, especially those seeking to scale globally, a strong credit rating is no longer optional—it is a strategic necessity. It enhances capital efficiency, stakeholder trust, and long-term viability.

Working with recognized CRAs, maintaining financial discipline, and adhering to strong governance practices can ensure your business not only receives a favorable rating—but thrives because of it.

🔗 Useful Resources:

• CRAB – Credit Rating Agency of Bangladesh

• ECRL – Emerging Credit Rating Ltd.

• BSEC – Bangladesh Securities and Exchange Commission

• Dhaka Stock Exchange

• Bangladesh Bank – Bond Guidelines