What Is the Japan Credit Rating Agency (JCR)
Let me tell you about the Japan Credit Rating Agency, or JCR as it's commonly known. This is a Japanese financial services company that specializes in providing credit ratings for the corporate debt of Japanese companies and foreign bond issuers. Beyond that, JCR publishes various financial and economic information, acting as a reliable guide for assessing counterparty credit risk.
Key Takeaways on JCR
As Japan's primary credit rating agency, JCR handles ratings for corporate and financial bond issuers within the country. It also extends rating guidance to over 200 foreign issuers. In addition to ratings, JCR serves as a key source for economic and financial research, which it releases on a regular basis. The agency covers ratings for more than 60% of Japan's 1,000 publicly rated corporate issuers and over 70% of its financial industry. JCR gained official registration in the U.S. as a Nationally Recognized Statistical Rating Organization in 2007 and certification in the European Union in 2011. It employs two rating scales—one for long-term and one for short-term— with the long-term scale mirroring those used by S&P and Moody's. Finally, JCR has been actively expanding its global network through alliances with foreign credit rating agencies and approvals in various countries.
Understanding the Japan Credit Rating Agency (JCR)
You should know that JCR stands as one of Japan's key bond rating agencies, responsible for rating the vast majority of Japanese corporate debt, including asset-backed securities. It offers a range of services such as rating all types of debt securities, publishing research on financial markets, economics, and industries, and providing data services. JCR was established in April 1985.
Since its founding, JCR has endured numerous financial crises, including the Japanese real estate bubble, the Asian financial crisis, the 2007-08 global financial crisis, the European sovereign debt crisis, and the East Japan Tsunami. Through these experiences, it has positioned itself as an expert in credit risk analysis.
Over time, JCR has broadened its global presence by forging relationships with various countries and forming alliances with organizations like the Association of Credit Rating Agencies in Asia (ACRAA), VIS in Pakistan, CARE Ratings in India, HR Ratings in Mexico, and MARC in Malaysia.
Responsibilities of the Japan Credit Rating Agency (JCR)
JCR provides rating guidance for over 60% of about 1,000 publicly rated issuers in Japan. It also covers more than 70% of the financial industry there and holds a dominant position in the medical and educational sectors.
In response to globalization and the needs of bond issuers and investors for international ratings, JCR's services are utilized in major overseas markets such as the U.S., Europe, Turkey, Hong Kong, Indonesia, and Thailand. It has assigned credit ratings to more than 200 foreign issuers. As mentioned, it was registered as a NRSRO in the U.S. in 2007 and certified in the EU in 2011.
Beyond ratings, JCR offers clients additional services including networking opportunities, private credit assessments, credit risk estimation modeling, evaluations for green and social finance, seminars and training programs, information on economy and industry trends, and platforms for research and knowledge sharing.
The agency is transparent about its processes; it details all rating methodologies on its website, categorizing them into five groups: corporates, financial institutions, the public sector, structured finance, and sovereigns and supranationals.
Japan Credit Rating Agency (JCR) Rating Scales
JCR uses two distinct rating scales for debt issuances: one for long-term and one for short-term. The long-term scale is comparable to those employed by Western agencies like S&P and Moody's.
On the long-term scale, ratings range from AAA to D, where AAA represents the highest quality and D indicates default. For ratings between AA and B, a plus or minus can be added to show the issuer's relative standing within that category.
The short-term scale goes from J-1 to J-3, followed by NJ and D. Here, D again signifies default, while J-1 denotes the highest quality level.
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