Japan Credit Rating Agency (JCR)

A leading credit rating agency in Japan and an expert in credit risk analysis.

Adin Lykken

Reviewed by

Adin Lykken

Expertise: Consulting | Private Equity


July 24, 2023

The Japan Credit Rating Agency (JCR), established in 1985, is a leading credit rating agency in Japan and an expert in credit risk analysis. It provides credit ratings to:

  • Corporations
  • Financial institutions
  • Insurance companies 
  • Governments
  • Public sector firms
  • Medical institutions
  • Educational institutions.

The financial sector has a rating coverage ratio of roughly 70%, meaning approximately 70% of financial firms have received a credit rating. In addition, most Japanese corporate bond issuers use JCR's rating as a fundraising tool. 

JCR's rating coverage exceeds 60% of approximately 1,100 publicly-rated issuers in Japan. Additionally, it has a history of rating over 200 foreign issuers for credit.

Turkey, Thailand, Indonesia, Hong Kong, and the US recognize the organization and their ratings. It also has recognition in several European nations, including:

  • France
  • Belgium
  • Germany
  • Luxembourg

Since its inception in April 1985, it has undergone many financial crises, including the:

 Key takeaways

  1. Establishment and Role of JCR: The Japan Credit Rating Agency (JCR) was founded in 1985, providing credit ratings to a wide range of entities in Japan.

  2. JCR's Market Coverage: JCR covers roughly 70% of the financial sector and over 60% of publicly-rated issuers in Japan.

  3. International Recognition of JCR: JCR's ratings are recognized by several countries globally, and it has rated over 200 foreign issuers.

  4. JCR's Credit Rating Process and Methodologies: JCR's credit rating process involves data submission, analysis, interviews, and a rating committee meeting.

  5. JCR's Global Expansion and Sustainable Finance: JCR is expanding internationally, partnering with foreign credit rating agencies, and providing evaluations of evolving "sustainable finance".

History and accomplishments

Right after its establishment in 1985, in the late 1980s, the Japan Credit Rating Agency launched fee-based ratings for:

  • Yen-denominated foreign bonds
  • Domestic bonds
  • Commercial papers.

From March 2006 to 2011, it was recognized as an eligible ECAI (External Credit Assessment Institution) under BIS regulations in:

  • Japan
  • France
  • Belgium
  • Luxembourg
  • Germany
  • Hong Kong

The recognition from France made JCR the first Japanese credit rating agency to receive an award from an E.U. member country. In 2010, it registered as a credit rating agency with the Financial Services Agency (Japan).

JCR signed the proposal for ESG (environmental, social, and governance) in credit ratings by UNPRI. More recently, in 2019, it got approved as a verifier for climate bonds. 

JCR isn't the only player in the market; international rating agencies, like Moody's and S&P, have also rated corporate bonds issued by Japanese companies. 

In 2021, JCR launched a fund portfolio rating.

Japanese rating companies with a local presence, such as R&I and JCR, dominate the market. As a result, the U.S. Securities and Exchange Commission (SEC) designated R&I and JCR, two local rating organizations, as Nationally Recognized Statistical Rating Organizations (NRSROs) in 2007. 

It is the only Japanese rating agency officially registered in the U.S. and certified in the E.U. and the United Kingdom.

Credit Rating and Credit Rating Agencies (CRA) 

A credit rating assesses a person's or a corporate entity's capacity to meet financial obligations based on income and prior payback histories. Simply put, it determines the likelihood that the borrower will repay a loan.

These ratings are given by credit rating agencies such as

  • Moody's
  • Standard and Poor's
  • Fitch.

Sovereign credit ratings apply to national governments, and corporate credit ratings apply to corporations.

For individuals, it's not credit rating but credit score that determines their ability to repay a loan.

A high credit rating means a high probability of paying back the loan in its entirety without any problem. Conversely, a low credit rating means a low likelihood of paying back the loan, i.e., The borrower may have trouble paying back the loan.

The duration of your credit history, past repayment history, and credit utilization are the three most frequently impacting your credit score.

A borrower's approval for a loan and the interest rate at which the loan must be repaid are both based on credit ratings.


  • Credit ratings help entice investors.
  • Non-listed companies seek credit ratings to provide managerial transparency.
  • Credit ratings are applied to syndicated loans.
  • Public issuance of bonds, commercial papers (CPs), etc., for financing from the market, is hard to carry out without a credit rating to convey information on credit risk.
  • Under BIS rules introduced in 2006 as the standards of risk measurement for the banking industry, credit rating is used as a calculation basis of risk weight for given assets, e.g., loans, securities, etc., held by the bank.

JCR's credit rating process 

1. Request 

A bond issuer (obligor) typically initiates the credit rating process by requesting, as can another party, the issuer's permission.

2. Selection 

After receiving the request for a credit rating, analysts are chosen, considering the sector of the debt to be evaluated. To maintain the integrity of the analysis, more than two analysts are selected and are called Responsible Rating Analysts. 

3. Reviewing the feasibility

General managers and chief analysts evaluate the viability of offering a credit rating.

4. Submission of data

Responsible Rating Analysts ask the issuer to provide the data necessary for the analysis. This data may include corporate profile, production, sales, financial statements, business plans, and sometimes nonpublic information.  

5. Sources of information 

Responsible rating analysts only use information that satisfies this policy's quality criteria. 

Credit-rating activities must be suspended if Responsible Rating Analysts determine that the data used to determine credit ratings do not meet the quality criteria.

6. Analysis of data

Responsible rating analysts carry out both quantitative and qualitative studies. 

The Responsible Rating Analysts hold meetings to discuss and identify issues and anomalies, and, based on this, they compile a series of questions sent to the issuer. They may also conduct an interview.

7. Interviews 

There are two types of interviews: management and staff. If necessary, they might undertake physical inspections, such as visiting a factory.

8. Rating Committee

The Responsible Rating Analysts analyze the credit strength of the issuer being evaluated. It is done by analyzing the interviews and data supplied. They subsequently prepare papers for convening a Rating Committee.

Once the documents are prepared, the Rating Committee meeting is held, during which the analysts suggest a credit rating and explain why they think it should be assigned.

9. Informing issuers of credit rating decisions 

Before the credit rating is published, the issuer is instantly alerted that a credit rating has been decided, giving the entity under assessment the chance to object to factual mistakes that the rating committee may make.

10. Publication

Publication may occur through a press release to the Tokyo Stock Exchange press club, transmission to electronic media, like Bloomberg and Reuters, or publication on JCR's website.

11. Review 

JCR reviews credit ratings regularly.

The credit rating will also be reassessed if a sudden or significant change in the rated entity's performance or the business environment could materially affect the rated entity's creditworthiness, like a merger or acquisition.

12. Suspension and withdrawal

Temporary measures, like suspension, result in withdrawal of the credit rating if it appears improbable that the incident that led to suspension will be rectified.

Suppose JCR determines that a significant change in the external facts, such as a lack of issuer cooperation concerning the availability of information, will make it challenging to undertake the rating review in the future. In that case, the credit rating will be removed. 

The Rating Committee shall determine such suspension or withdrawal.

Its rating methodologies are divided into five groups: corporates, financial institutions, the public sector, structured finance, and sovereigns and supranational. Rating methodologies for each industry can be found here

Rating scales used by Japan Credit Rating Agency

The Japan Credit Rating Agency has introduced four types of rating scales: long-term issuer, long-term issue, short-term issuer, and short-term issue.

Long-term issuer ratings – allow for comparing an issuer's overall ability to fulfill its financial obligations with other parties.


Long-term issuer ratings
AAAThe highest level
AAA very high level
AA high level
BBBAn adequate level (more likely to diminish)
BBThe certainty to honor financial obligations may not persist in the future
BA low level
CCCA possibility of default.
CCA high default risk
CA very high default risk
LDHonors a part of the obligation but fails to honor the rest
DFinancial obligations in default

Long-term issue ratings – permits comparison of the degree of assurance that obligations lasting more than a year will be met.

It follows the same scale as long-term issuer ratings. The only difference is that the LD rating is absent from this scale. Therefore, the rating list is as follows:

Long-term issue ratings

Short-term issuer ratings – allow comparison of the overall capacity of an obligor (issuer) to honor its entire financial obligations within a year. 

The rating scale for a short-term issue and issuer differs from that of a long-term issue and issuer.

Short-term issuer ratings
J-1The highest level; Obligations that are particularly likely to be fulfilled are indicated by the symbol J-1+
J-2A high level
J-3An adequate level
NJThe certainty to honor financial obligations may not persist in the future
LDHonors a part of the obligation but fails to honor the rest
DFinancial obligations in default

Short-term issue ratings – enable comparison of the degrees of certainty that obligations within a year will be honored.

It follows the same scale as a short-term issuer. Once again, The only difference is that the LD rating is absent from this scale. Therefore, the rating list is as follows:

Short-term issue ratings

A financial obligation defaults when the principle and/or interest payments are not fulfilled according to the original terms. 

The filing of a petition for legal proceedings such as bankruptcy, corporate reorganization, civil rehabilitation, or special liquidation can be reasons for JCR judges to deem it impossible that the principal and interest payments of financial obligations can be made as agreed.


JCR has been growing its international network, forming partnerships with foreign credit rating agencies, and obtaining accreditation as a credit rating agency in several nations.

Japanese investors are expanding their foreign investment portfolios, and Japanese businesses are accelerating their business developments abroad. 

To take advantage of this, JCR is strengthening its partnerships with foreign CRAs to facilitate information gathering and to support Japanese companies' overseas fundraising, including:

  • Association of Credit Rating Agencies in Asia (ACRAA)
  • JCR Eurasia Rating in Turkey
  • JCR LATAM in Peru
  • VIS in Pakistan
  • CARE Ratings in India
  • HR Ratings in Mexico
  • MARC in Malaysia

Amid the rapid global expansion of efforts to overcome environmental and social issues and realize a sustainable society, JCR has provided accurate external evaluations of evolving "sustainable finance."

Researched and authored by Ishpreet Kaur | LinkedIn

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