Can a Company Change Its Credit Rating Agency?

Yes — a company can change its credit rating agency, either by moving an existing rated instrument to a new agency or by engaging an additional agency alongside the existing one, though the practical process involves specific considerations around lender consent, the outgoing agency's role, and how the change itself is likely to be perceived.

The Two Distinct Scenarios: Switching Versus Adding

It is worth distinguishing between two genuinely different scenarios that both fall under the general heading of 'changing agencies.' The first is switching — discontinuing the relationship with the existing agency and moving the rating of a specific instrument entirely to a new one. The second is adding — engaging a second agency alongside the existing one, either for the same instrument (obtaining two independent ratings) or for a different, new instrument. These scenarios involve different practical considerations and are generally read differently by the market.

The Practical Process for Switching Agencies

•      Confirming whether lender consent or notification is required under the terms of existing loan agreements, since many facilities specify or assume a particular rating agency or require notification of a change

•      Engaging the new agency for a fresh rating assessment, which — while it can draw on the company's existing documentation and rating history — is still conducted as a genuine, independent analytical exercise rather than a formality

•      Managing the transition period, during which the existing rating from the outgoing agency typically continues until formally withdrawn, with the withdrawal itself subject to the outgoing agency's own withdrawal policy

•      Communicating the change clearly to lenders and other stakeholders, ideally with a clear, straightforward rationale, since an unexplained agency switch can sometimes prompt questions from stakeholders about the reason behind it

Why the Reason for Switching Matters to How It Is Perceived

A switch motivated by clear, defensible reasons — seeking an agency with deeper sector expertise, consolidating multiple ratings under a single agency for administrative simplicity, or responding to a genuine, well-documented service issue with the prior agency — is generally viewed neutrally by the market. A switch that appears to follow shortly after an unfavourable rating action, however, can sometimes be perceived, rightly or wrongly, as an attempt to seek a more favourable outcome elsewhere — a perception that is worth being mindful of and, where relevant, proactively addressing in communication with lenders and other stakeholders.

Withdrawal of the Prior Rating

When a company discontinues its relationship with an agency, the existing rating does not simply disappear — it is either formally withdrawn (following the agency's specific withdrawal policy, which often requires certain conditions such as full repayment of the specific instrument, or explicit lender consent, particularly where the rating supports an outstanding facility) or, in some cases, continues to be maintained by the outgoing agency on a non-cooperation or similarly qualified basis if the company stops engaging with it, as covered in detail in the surveillance pillar of this content series.

Companies should specifically clarify the withdrawal process and conditions with the outgoing agency before initiating a switch, since an improperly managed withdrawal can result in a stale, unwithdrawn rating remaining publicly visible in a way that creates confusion rather than a clean transition.

Engaging a Second Agency Without Discontinuing the First

Rather than switching, many companies — particularly larger ones, or those seeking to broaden their access to different pools of lenders and investors — choose to add a second agency alongside the existing one, obtaining parallel ratings either on the same instrument or across different instruments. This approach avoids the transition considerations involved in a full switch, though it does involve managing two separate, ongoing surveillance relationships and their associated costs, and requires being prepared for the possibility that the two agencies' ratings, while generally broadly aligned, may not be perfectly identical, a topic covered in detail in the dedicated article on why two agencies can give different ratings elsewhere in this pillar.

Illustrative Example

A hypothetical mid-sized logistics company, rated for several years by one agency primarily focused on its bank facilities, decides to issue its first corporate bond to diversify its funding sources. Rather than switching away from its existing agency, it engages a second, different agency specifically for the bond rating, having found through discussions with prospective bond investors that this second agency carries particularly strong recognition in the specific debt capital markets segment the company is targeting. The company maintains both relationships going forward, each covering different instruments, without any disruption to its existing bank-facility rating — illustrating the 'adding' rather than 'switching' approach in practice.

Frequently Asked Questions

Does switching agencies require lender approval?

This depends on the specific terms of the loan agreements involved — many facilities require notification or explicit consent for a change in rating agency, so this should always be checked directly against the relevant loan documentation before proceeding.

Can a company simply stop paying an agency to make a rating disappear?

No — as covered in the surveillance section of this content series, failing to engage with an agency generally results in a non-cooperation designation rather than a quiet withdrawal, which is a distinctly negative outcome rather than a clean exit.

Talk to FinMen Advisors — for help preparing for a rating exercise, write to marketing@finmen.in or call +91 77387 14680.

Disclaimer: This article is intended for general informational and educational purposes only and does not constitute financial, credit, investment, or legal advice. Credit ratings are assigned solely by SEBI-registered Credit Rating Agencies (such as CRISIL, ICRA, CARE Ratings, India Ratings, Brickwork, Acuite, and Infomerics) based on their own methodologies, policies, and the information available to them at the time of assessment. FinMen Advisors provides preparatory and advisory support to companies undergoing a rating exercise and does not issue, influence, or guarantee any rating outcome. Readers should exercise independent judgement and consult qualified professionals before making business or financial decisions.