Corporate Credit Ratings
The credit rating of a corporation is a financial indicator to potential investors of debt securities such as bonds. Credit rating is usually of a financial instrument such as a bond, rather than the whole corporation. These are assigned by credit rating agencies such as A. M. Best, Dun & Bradstreet, Standard & Poor's, Moody's or Fitch Ratings and have letter designations such as A, B, C. The Standard & Poor's rating scale is as follows, from excellent to poor: AAA, AA+, AA, AA-, A+, A, A-, BBB+, BBB, BBB-, BB+, BB, BB-, B+, B, B-, CCC+, CCC, CCC-, CC, C, D. Anything lower than a BBB- rating is considered a speculative or junk bond. The Moody's rating system is similar in concept but the naming is a little different. It is as follows, from excellent to poor: Aaa, Aa1, Aa2, Aa3, A1, A2, A3, Baa1, Baa2, Baa3, Ba1, Ba2, Ba3, B1, B2, B3, Caa1, Caa2, Caa3, Ca, C.
A. M. Best rates from excellent to poor in the following manner: A++, A+, A, A-, B++, B+, B, B-, C++, C+, C, C-, D, E, F, and S. The CTRISKS rating system is as follows: CT3A, CT2A, CT1A, CT3B, CT2B, CT1B, CT3C, CT2C and CT1C. All these CTRISKS grades are mapped to one-year probability of default.
| Moody's | S&P | Fitch | ||||
|---|---|---|---|---|---|---|
| Long-term | Short-term | Long-term | Short-term | Long-term | Short-term | |
| Aaa | P-1 | AAA | A-1+ | AAA | F1+ | Prime |
| Aa1 | AA+ | AA+ | High grade | |||
| Aa2 | AA | AA | ||||
| Aa3 | AA- | AA- | ||||
| A1 | A+ | A-1 | A+ | F1 | Upper medium grade | |
| A2 | A | A | ||||
| A3 | P-2 | A- | A-2 | A- | F2 | |
| Baa1 | BBB+ | BBB+ | Lower medium grade | |||
| Baa2 | P-3 | BBB | A-3 | BBB | F3 | |
| Baa3 | BBB- | BBB- | ||||
| Ba1 | Not prime | BB+ | B | BB+ | B | Non-investment grade speculative |
| Ba2 | BB | BB | ||||
| Ba3 | BB- | BB- | ||||
| B1 | B+ | B+ | Highly speculative | |||
| B2 | B | B | ||||
| B3 | B- | B- | ||||
| Caa1 | CCC+ | C | CCC | C | Substantial risks | |
| Caa2 | CCC | Extremely speculative | ||||
| Caa3 | CCC- | In default with little prospect for recovery |
||||
| Ca | CC | |||||
| C | ||||||
| C | D | / | DDD | / | In default | |
| / | DD | |||||
| / | D | |||||
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