A credit rating is an independent and reliable assessment of an issuer's creditworthiness, on the basis of which market participants can make informed financial decisions. This may entail a reduction in the issuer's costs of attracting borrowed money. For those issuers that raise funds against third-party guarantees, a credit rating may reduce the cost of such a guarantee or raise funds more efficiently without purchasing a guarantee.
International rating agency Standard & Poor's (S&P) is a subsidiary of McGraw Hill Corporation, engaged in analytical research of the financial market. It belongs to the three most influential international rating agencies. As an international rating agency, Standard & Poor's assigns short-term and long-term credit ratings.
Credit ratings can be assigned to an issuer (national government, regional and local authorities, corporations, financial institutions, insurance companies, funds, etc.) or a separate debt obligation.
In the CIS countries, Standard & Poor's assigns ratings on an international scale (for obligations in the national and foreign currency) and according to national scales created specifically for each specific country (currently for Russia and Kazakhstan).
Standard & Poor's indexes are used by investors around the world to evaluate the performance of investments, as well as the basis for a wide range of financial instruments, such as index funds, deposit products, futures, options and exchange-traded funds (ETFs).
The issuer's credit rating according to the Standard & Poor's international scale expresses the current opinion on the general creditworthiness of the issuer of debt obligations, the guarantor or guarantor, business partner, his ability and intention to timely and fully fulfill his debt obligations.
The credit rating of debt obligations according to the international scale Standard & Poors expresses the current opinion on credit risk on specific debt obligations (bonds, bank loans, loans, other financial instruments).
Standard & Poor's long-term rating assesses the ability of the issuer to fulfill its debt obligations in a timely manner. Long-term ratings range from the highest category - "AAA" to the lowest - "D". Ratings in the range from "AA" to "CCC" can be supplemented with the sign " plus" (+) or "minus" (-), denoting intermediate rating categories in relation to the main categories.
A short-term rating is an assessment of the likelihood of timely repayment of obligations that are considered short-term in the respective markets. Short-term ratings also range from 'A-1' for the highest quality obligations to 'D' for the lowest quality obligations. Ratings within the 'A-1' category may include a plus sign (+) to highlight stronger commitments in that category.
In addition to long-term ratings, Standard & Poor's has special rating definitions. preferred shares, funds money market, mutual bond funds, the solvency of insurance companies and companies working with derivatives.
The company analyzes the capital markets of more than 110 countries.
Moody's uses two different rating systems, or scales, to value bonds. One of them - the global (international) scale Moody's (Moody's Global Scale) - is used to assign ratings to non-financial and financial institutions, sovereign and subsovereign issuers, and structured finance securities. The global scale establishes a correspondence between different rating categories and relative levels of the mathematical expectation of losses in different time periods. The mathematical expectation of losses includes an estimate of the probability of default and the expectation of losses at default.
As conceived by Moody's, the expected loss associated with a particular rating symbol and certain period time, should be the same for all debt obligations and issuers that have been assigned an appropriate rating on the global (international) scale. All of Moody's rating methodologies, rating practices and rating monitoring systems are designed to ensure consistency in ratings.
In addition, in order to meet the needs of investors, Moodys also assigns National Scale Ratings in certain jurisdictions, which are opinions about the relative creditworthiness of issuers and debt issues within a given country and cannot be used for comparison with ratings. assigned in other countries.
Fitch Ratings
Fitch Ratings is an international rating agency dedicated to providing global credit markets independent and forward-looking credit ratings, analytical studies and data. Employees of Fitch Ratings, working in 50 offices around the world, analyze the capital markets of more than 150 countries.
Fitch Ratings is headquartered in New York and London and is part of the Fitch Group. In addition to Fitch Ratings, the group includes Fitch Solutions, Fitch Ratings' products and services distribution arm, which provides information, analysis and related services. The Fitch Group also includes Algorithmics, a global leader in corporate risk management solutions. The Fitch Group is majority owned by Fimalac S.A., headquartered in Paris, France.
Fitch has been assigning international and national credit ratings to banks, non-banking financial institutions, insurance companies, corporate sector issuers, regional and local authorities, and sovereign governments for over 15 years. Fitch also rates fixed income debt issues and structured finance transactions.
Fitch credit ratings are an opinion on an issuer's relative ability to meet its financial obligations such as paying interest, paying dividends on preferred shares, repaying principal, settling insurance claims, and meeting counterparty obligations.
Fitch's credit ratings cover corporate, sovereign (including interstate and subnational entities), financial, banking and insurance issuers, municipalities and other entities within public finance, as well as securities and other obligations issued by such issuers, and, finally, structured finance instruments secured by accounts receivable or other financial assets.
Fitch Credit Ratings do not directly measure any risk other than credit risk. In particular, the ratings do not assess downside risks market value rated security due to a change interest rates, liquidity or other market factors. However, with regard to payment obligations for rated obligations, market risks may be considered to the extent that it affects the issuer's ability to make the necessary payments. Ratings do not reflect market risk in terms of its effect on the size or terms of the payment obligation (for example, in the case of index-linked bonds).
In the default components of the ratings of specific obligations or instruments, the agency, as a rule, takes into account the probability of non-payments or defaults based on the terms of the documentation of this instrument. AT individual cases taking into account special factors, Fitch may assign a rating at a higher or lower level than suggested by the notes' documentation. In such cases, the agency clearly indicates the basis for such an opinion in the relevant rating message.
The material was prepared on the basis of information from open sources
Standard & Poors
Standard & Poor's is a rating agency that is one of the Big Three along with Fitch Rating and dates back to 1860. They have been rated for more than 100 countries with a total debt of $34 trillion. In addition, the company is the creator of the S&P series of stock indices for the US and international markets. valuable papers. It has 6,300 employees.
Investment class.
"AAA" - a very high ability to timely and fully meet their debt obligations; the highest rating.
"AA" - a high ability to timely and fully meet their debt obligations.
"A" - moderately strong ability to meet its debt obligations on time and in full, with high sensitivity to the impact of adverse changes in commercial, financial and economic conditions.
'BBB' - Adequate ability to meet its debt obligations on time and in full, however there is a higher sensitivity to the impact of adverse changes in commercial, financial and economic conditions.
speculative class.
BB - Out of danger in the short term, but more sensitive to the impact of adverse changes in commercial, financial and economic conditions.
"B" - higher vulnerability in the presence of unfavorable commercial, financial and economic conditions, but at present there is an opportunity to fulfill debt obligations on time and in full.
"CCC" - on this moment there is a potential for the issuer to default on its debt obligations - this is largely dependent on favorable commercial, financial and economic conditions.
“CC” – currently there is a high probability that the issuer will default on its debt obligations.
"C" - the issuer is in bankruptcy proceedings or similar action has been taken, but payments or fulfillment of debt obligations continue.
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And Fitch Rating, traces its history back to 1860. They have been rated for more than 100 countries with a total debt of $34 trillion. In addition, the company is the creator of the S&P series of stock indices for the US and international securities market. It has 6,300 employees.
Investment class.
"AAA" - a very high ability to timely and fully meet their debt obligations; the highest rating.
"AA" - a high ability to timely and fully meet their debt obligations.
"A" - moderately strong ability to meet its debt obligations on time and in full, with high sensitivity to the impact of adverse changes in commercial, financial and economic conditions.
'BBB' - Adequate ability to meet its debt obligations on time and in full, however there is a higher sensitivity to the impact of adverse changes in commercial, financial and economic conditions.
speculative class.
BB - Out of danger in the short term, but more sensitive to the impact of adverse changes in commercial, financial and economic conditions.
"B" - higher vulnerability in the presence of unfavorable commercial, financial and economic conditions, but at present there is an opportunity to fulfill debt obligations on time and in full.
"CCC" - there is currently a potential default by the issuer of its debt obligations - this is largely dependent on favorable commercial, financial and economic conditions.
“CC” – currently there is a high probability that the issuer will default on its debt obligations.
"C" - the issuer is in bankruptcy proceedings or similar action has been taken, but payments or fulfillment of debt obligations continue.
"SD" - selective default on this debt obligation while continuing to make timely and full payments on other debt obligations.
"D" - default on debt obligations.
- “positive” – the rating may increase;
- "negative" - the rating may go down;
- "stable" - the change is unlikely;
- “developing” – either an increase or a downgrade is possible.
The S&P national rating scale uses the prefix ru: "ruAAA", "ruAA", "ruA" and so on. The company's rating cannot be higher than the sovereign rating. Therefore, in the description of each class, it is added that the rating indicates the company's ability to pay its debt relative to other issuers.
In addition to credit ratings, S&P evaluates the management of companies. To do this, the agency has developed two systems: "Corporate Governance Rating" and GAMMA - assessment of non-financial risks associated with the purchase of shares in companies in emerging markets.
To many investors, Standard & Poor`s has become the "gold standard" for credit reports, even despite the crisis of 2008. This rating agency, commonly known to many as (S&P), is subsidiary McGraw Hill. It cooperates with more than 20 countries, publishes financial studies and represents the investment community with independent credit ratings for such financial instruments like stocks and bonds. She is also one of the Big Three credit rating agencies, including Moody's Investor Service and Fitch Ratings.
Stock Indices
Standard & Poor`s is well known for its stock indexes that span all corners of the world, the US S&P 500, Australia S&P/ASX 200, Canada S&P/TSX, Italy's S&P/MIB and India's S&P CNX Nifty.
Standard & Poor`s - because it is international rating agency, engaged in the assignment of long-term and short-term credit ratings.
(Standard & Poor's) in addition to the international scale, supports a number of national scales, it also includes Russia. The National Scale is for those who participate in national financial markets. The rating scale shows the reliability of issuers and debt obligations that are present on national market. It provides a better opportunity to see differences in the creditworthiness of issuers as it eliminates certain sovereign risks such as transfer Money outside the state, etc.
History of Standard & Poor's
The history of the company begins in 1860, with the publication in Henry Varnum Poor, about the history railways and channels in the USA. This publication is an attempt to compile complete information about the financial and operating conditions of American railroad companies. Since then, Henry Varnum and his son Henry William have been publishing updated versions of this edition every year.
In 1906, (Luther Lee Blake) Luther Lee Blake founded the Standard Statistics Bureau to provide financial information about the inconsistency of the railway companies have always been in the public eye. Instead of publishing books, Standard Statistics will use 5" x 7" maps with more frequent updates.
In 1941, Poor and Standard Statistics merged to become Standard & Poor's Corp. In 1966, the company was acquired by The McGraw-Hill Companies and now includes various financial services.
The rating agency (RA) Standard & Poor's (S&P) is an international company that specializes in research and assessment of the creditworthiness of securities issuers. This agency provides such a service as the assignment of an international credit rating. Her customers are financial companies, firms, states. The presence of a rating provides an opportunity for issuers to offer their own to a fairly wide range of investors. A credit score makes a lender more famous and enhances their reputation.
Characteristics of RA "Standard & Poor's"
This entity is a subsidiary of the American "McGraw-Hill", which is engaged in research of financial market analytics.
The history of this organization has about 150 years. Representative offices of RA "Standard & Poor's" are located in 23 countries of the world. This organization, in addition, is known as the founder and editor of the Australian stock index S & P 200 and the US - S & P500.
Functions of RA "Standard & Poor's":
Oversight;
Informative;
Regulatory;
prognostic.
Services of RA "Standard & Poor's":
implementation of analytical information and the results of their research to investors.
Ratings of RA "Standard & Poor's"
This organization to designate long-term rating the so-called "safe investment" uses the following letters:
A, A+, A- - such credit ratings are characterized as "reliability above average", with enough effective factors protection. A credit rating with the designation A- informs that during economic crises there are risks of non-payment of the principal debt or dividends on it.
ВВВ+, ВВВ, ВВВ- - credit ratings of the level of "reliability below the average", in which the probability of repayment of the loan and interest is considered adequate, and the degree of risk varies depending on the stage of development of the country's economy.
Speculative or, in other words, "junk", non-investment ratings of RA "Standard & Poor's":
B+, B, B- - degree financial protection varies depending on external financial and economic conditions and on the stages economic development states.
