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| And as in the early part of the millennium, we saw regulatory capital ratios predicated on ratings, meaning anyone who could hoodwink gullible [[rating agency]] professionals with a sophisticated cashflow model could create financial instruments with the potential to detonate the financial markets as we know them. [[CDO Squared|Just as well that never happened]]. | | And as in the early part of the millennium, we saw regulatory capital ratios predicated on ratings, meaning anyone who could hoodwink gullible [[rating agency]] professionals with a sophisticated cashflow model could create financial instruments with the potential to detonate the financial markets as we know them. [[CDO Squared|Just as well that never happened]]. |
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| | Anyway, here, with feeling, you can find the ratings notches of each of the main organisations: |
| | *'''[[S&P]]''': [https://en.wikipedia.org/wiki/S%26P_Global_Ratings here] (as set out by Wikipedia) |
| | *'''[[Moody’s]]''': [https://www.moodys.com/sites/products/AboutMoodysRatingsAttachments/MoodysRatingSymbolsandDefinitions.pdf here] (as published by Moody’s in a handy PDF). |
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| {{sa}} | | {{sa}} |
| *[[Beware of shorthand]] but [[it’s okay to generalise]] | | *[[Beware of shorthand]] but [[it’s okay to generalise]] |
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| Anyway, here, with feeling, are the ratings notches.
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| ===S&P===
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| '''Investment Grade'''
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| *{{S&P|AAA}}: An obligor rated 'AAA' has extremely strong capacity to meet its financial commitments. 'AAA' is the highest issuer credit rating assigned by Standard & Poor's. Equivalent to Moody's {{moodys|Aaa}}
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| *{{S&P|AA}}: An obligor rated 'AA' has very strong capacity to meet its financial commitments. It differs from the highest-rated obligors only to a small degree. Equivalent to Moody's {{moodys|Aa2}}Includes:
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| **{{S&P|AA+}}: equivalent to Moody's {{moodys|Aa1}} (high quality, with very low credit risk, but susceptibility to long-term risks appears somewhat greater)
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| **{{S&P|AA}}: equivalent to {{moodys|Aa2}}
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| **{{S&P|AA-}}: equivalent to {{moodys|Aa3}}
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| *{{S&P|A}}: An obligor rated 'A' has strong capacity to meet its financial commitments but is somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than obligors in higher-rated categories. Equivalent to Moody's {{moodys|A1}}
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| **{{S&P|A+}}: equivalent to {{moodys|Aa}}
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| **{{S&P|A}}: equivalent to {{moodys|A1}}
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| **{{S&P|A-}}: equivalent to {{moodys|A2}}
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| *{{S&P|BBB+}}: An obligor rated 'BBB' has adequate capacity to meet its financial commitments. However, adverse economic conditions or changing circumstances are more likely to lead to a weakened capacity of the obligor to meet its financial commitments. Equivalent to Moody's {{moodys|A3}}
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| *{{S&P|BBB}}: Equivalent to Moody's {{moodys|A}}
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| '''Non-Investment Grade''' (also known as [[junk bonds]])
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| *{{S&P|BB}}: An obligor rated 'BB' is less vulnerable in the near term than other lower-rated obligors. However, it faces major ongoing uncertainties and exposure to adverse business, financial, or economic conditions, which could lead to the obligor's inadequate capacity to meet its financial commitments.
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| *{{S&P|B}}: An obligor rated 'B' is more vulnerable than the obligors rated 'BB', but the obligor currently has the capacity to meet its financial commitments. Adverse business, financial, or economic conditions will likely impair the obligor's capacity or willingness to meet its financial commitments.
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| *{{S&P|CCC}}: An obligor rated 'CCC' is currently vulnerable, and is dependent upon favorable business, financial, and economic conditions to meet its financial commitments.
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| *{{S&P|CC}}: An obligor rated 'CC' is currently highly vulnerable.
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| *{{S&P|C}}: highly vulnerable, perhaps in bankruptcy or in arrears but still continuing to pay out on obligations
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| *{{S&P|CI}}: past due on interest
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| *{{S&P|R}}: An obligor rated 'R' is under regulatory supervision owing to its financial condition. During the pendency of the regulatory supervision, the regulators may have the power to favor one class of obligations over others or pay some obligations and not others.
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| *{{S&P|SD}}: has selectively defaulted on some obligations
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| *{{S&P|D}}: has defaulted on obligations and S&P believes that it will generally default on most or all obligations
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| *{{S&P|NR}}: not rated
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| ===Moody's===
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| {| class="wikitable” style="text-align:center"
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| ! colspan="3” style="background:#AACCEE” |Moody's credit ratings
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| |- style="font-weight:bold"
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| !colspan="3” style="background:#AAEEAA"| Investment grade
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| |- style="font-weight:bold"
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| ! width ="140” style="background:#808080; color:White"| Rating ||! width ="350” style="background:#808080; color:White” |Long-term ratings ||! width ="200” style="background:#808080; color:White"|Short-term ratings
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| | style="background:LightGrey” |<!-- NOTE: Moody's uses Aaa not AAA. Do not “correct” Aaa to AAA -->{{moodys|Aaa}} || style="background:#F2F2F2; text-align:left"|Rated as the highest quality and lowest credit risk. ||! rowspan="5” |'''Prime-1'''<br/>Best ability to repay short-term debt
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| | style="background:LightGrey” |{{moodys|a1}} ||! rowspan="3” style="background:#F2F2F2; text-align:left"|Rated as high quality and very low credit risk.
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| | style="background:LightGrey” |{{moodys|a2}}
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| | style="background:LightGrey” |{{moodys|a3}}
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| | style="background:LightGrey” |{{moodys|1}} ||! rowspan="3” style="background:#F2F2F2; text-align:left"|Rated as upper-medium grade and low credit risk.
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| | style="background:LightGrey” |{{moodys|2}} ||! rowspan="2"|'''Prime-1'''/'''Prime-2'''<br/>Best ability or high ability to repay short term debt
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| | style="background:LightGrey” |{{moodys|3}}
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| | style="background:LightGrey” |{{moodys|aa1}}||! rowspan="3” style="background:#F2F2F2; text-align:left"|Rated as medium grade, with some speculative elements and moderate credit risk. ||'''Prime-2'''<br/> High ability to repay short term debt
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| | style="background:LightGrey” |{{moodys|aa2}} ||'''Prime-2'''/'''Prime-3'''<br/>High ability or acceptable ability to repay short term debt
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| | style="background:LightGrey” |{{moodys|aa3}} ||'''Prime-3'''<br/>Acceptable ability to repay short term debt
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| !colspan="3” style="background:LightCoral"| Speculative grade
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| ! width ="140” style="background:#808080; color:White"| Rating ||! width ="350” style="background:#808080; color:White” |Long-term ratings ||! width ="200” style="background:#808080; color:White"|Short-term ratings
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| | style="background:LightGrey"|{{moodys|a1 ||! rowspan="3” style="background:#F2F2F2; text-align:left"| Judged to have speculative elements and a significant credit risk. ||! rowspan="11” | '''Not Prime'''<br/>Do not fall within any of the prime categories
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| | style="background:LightGrey” |{{moodys|a2}}
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| | style="background:LightGrey” |{{moodys|a3}}
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| | style="background:LightGrey” |{{moodys|1}} ||! rowspan="3” style="background:#F2F2F2; text-align:left"| Judged as being speculative and a high credit risk.
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| | style="background:LightGrey"|{{moodys|2}}
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| | style="background:LightGrey” |{{moodys|3}}
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| | style="background:LightGrey” |{{moodys|aa1}} ||! rowspan="3” style="background:#F2F2F2; text-align:left"| Rated as poor quality and very high credit risk.
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| | style="background:LightGrey” |{{moodys|aa2}}
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| | style="background:LightGrey” |{{moodys|aa3}}
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| | style="background:LightGrey” |{{moodys|a}} || style="background:#F2F2F2; text-align:left"| Judged to be highly speculative and with likelihood of being near or in default, but some possibility of recovering principal and interest.
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| | style="background:LightGrey” |{{moodys|}} ||! rowspan="1” style="background:#F2F2F2; text-align:left"|Rated as the lowest quality, usually in default and low likelihood of recovering principal or interest.
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| |}
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