A research study submitted in partial fulfillment of the requirements for the degree of Master of Business Administration, School of Management

The Thai Credit Rating industry is 10 years old. There are two credit rating agencies in Thailand: Thai Rating and Information Services and Fitch Ratings Thailand Limited. TRIS was set up in 1993 with technical collaboration from Standard and Poor (S&P). Fitch Thailand is a subsidiary of Fitch IBCA Duff and Phelps and started operations in February 2001. A total of 134 companies and instruments have been rated in Thailand during 1998-2002. No institution or instrument was rated by both the agencies. There have been 29 instances of rating changes during the study period. 76% of the changes were upgrades; the degree of upgrade was also found to be higher than the degree of downgrade. The study shows that the rating changes are unbiased, caused by changes in the characteristics of the company or its environment. The ratings changes do not show any pattern of correction to previous systematic errors. An in-depth case study of Italian - Thai Development Plc reveals that a lag exists between actual perfo1mance changes of the company and changes in credit rating. On the other hand, the stock market reacts very quickly to changes in the company or its environment. This is in agreement with the concept of Credit Ratings being long - te1m indicators of a company's ability to meet debt obligations; as such the rating company will not reso1t to changing the credit ratings very frequently based on short-te1m market cues.