New Delhi, Nov. 19 -- In the quest for returns that outpace traditional deposits, many Indian investors are increasingly turning to the corporate bond market. This shift is welcome, but as with any investment, it carries inherent risks. For the bond investor, the single most important first line of defence is the credit rating.

Think of a credit rating as a CIBIL score, but for a company or a specific bond. Just as a personal CIBIL score indicates an individual's creditworthiness, a rating from a Credit Rating Agency (CRA) provides a professional opinion on an issuer's ability and willingness to make timely interest and principal payments on its debt.

In India, this critical function is performed by CRAs registered with the Securities a...