Unlike S&P and Fitch, the primary purpose of Moody’s ratings is the evaluation of projected losses in case of a default. The company covers more than 135 sovereign nations, 5,000 non-financial corporate issuers, 4,000 financial institutions, 18,000 public finance issuers, 11,000 structured finance transactions, and 1,000 infrastructure and project finance issuers. Moody’s is another credit and bond rating agency accredited by NRSRO. Payment on a financial commitment or breach of an imputed promise also used when a bankruptcy petition has been filed or similar action taken. Highly vulnerable default has not yet occurred but is expected to be a virtual certainty.Ĭurrently highly vulnerable to non-payment, and ultimate recovery is expected to be lower than that of higher rated obligations. More vulnerable to adverse business, financial and economic conditions but currently has the capacity to meet financial commitments.Ĭurrently vulnerable and dependent on favorable business, financial and economic conditions to meet financial commitments. Less vulnerable in the near-term but faces major ongoing uncertainties to adverse business, financial and economic conditions. Strong capacity to meet financial obligations, but somewhat susceptible to adverse economic conditions and changes in circumstances.Īdequate capacity to meet financial commitments, but more subject to adverse economic conditions. Very strong capacity to meet financial obligations.
The main goal of the S&P credit rating is the assessment of a security’s default probability.Įxtremely strong capacity to meet financial obligations. S&P issues both long-term and short-term bond ratings. The company covers more than one million credit ratings on government and corporate bonds, structured finance entities, and securities. Standard & Poor’s (S&P) is the oldest credit rating agency and one of the three Nationally Recognized Statistical Rating Organizations (NRSRO) accredited by the U.S. Non-investment grade bonds are riskier, but they offer a higher yield.īond ratings prepared by professional analysts provide institutional and individual investors with a reliable source for making investment decisions. Investment-grade bonds are considered safe investments with minimal default risk but provide minimal yields. However, all rating systems classify bond investments by quality grade (investment grade/non-investment grade/not rated) and risk (from default to highest quality). Each rating agency uses its own grading system.
The three private independent rating agencies – S&P, Moody’s, and Fitch – control almost 95% of the market share of the bond rating business. The ratings are published by credit rating agencies and provide evaluations of a bond issuer’s financial strength and capacity to repay the bond’s principal and interest according to the contract. Bond ratings are representations of the creditworthiness of corporate or government bonds.
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