Finance > Credit ratings > Standard & Poor's

What ratings mean

01 January 1900

A short-term rating is an assessment of the likelihood of timely repayment of obligations considered short-term in relevant markets. Short-term ratings are graded into several categories, ranging from ''A-1'' for the highest quality obligations to ''D'' for the lowest. The ''A-1'' rating may also be modified by a plus sign to distinguish the stronger credits in that category.

In addition to long-term and short-term ratings have specific rating definitions for preferred stock, money market funds, mutual bond funds, financial strength and financial enhancement ratings of insurance companies and program ratings for derivative product companies.

Outlooks
An outlook notation indicates the possible direction in which a rating may move over the next two to three years.

  • "Positive": may be raised
  • "Negative": may be lowered
  • "Stable": unlikely to change
  • "Developing": may be raised or lowered

CreditWatch
A CreditWatch listing highlights the potential for near term change in a credit rating. It signals to investors that further analysis is being performed.

What the "letter" ratings mean

  • AAA: Extremely strong capacity to meet financial commitments. Highest rating.
  • AA: Very strong capacity to meet financial commitments.
  • A: Strong capacity to meet financial commitments, but somewhat susceptible to adverse economic conditions and changes in circumstances.
  • BBB: Adequate capacity to meet financial commitments, but more subject to adverse economic conditions.
  • BBB- (minus): this is the lowest rating before non-investment grade.
  • BB: Less vulnerable in the near-term but faces major ongoing uncertainties to adverse business, financial and economic conditions.
  • B: More vulnerable to adverse business, financial and economic conditions but currently has the capacity to meet financial commitments.
  • CCC: Currently vulnerable and dependent on favourable business, financial and economic conditions to meet financial commitments.
  • CC: Currently highly vulnerable.
  • C: A bankruptcy petition has been filed or similar action taken but payments or financial commitments are continued.
  • D: Payment default on financial commitments.
Ratings in the ''AAA,'' ''AA,'' ''A'' and ''BBB'' categories are regarded by the market as investment grade.
Ratings in the ''BB,'' ''B,'' ''CCC,'' ''CC'' and ''C'' categories are regarded as having significant speculative characteristics.
Ratings from ''AA'' to ''CCC'' may be modified by the addition of a plus (+) or minus (-) sign to show relative standing within the major rating categories.

The rating process in brief
Rating is based on principles of independence, integrity and disclosure - the same standards that underlie market confidence worldwide.

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