DEFINITION of Ratings Service

Ratings range from AAA or📖 Aaa (the highest) to C or D, which represents a company that has already defaulted.

BREAKING DOWN Ratings Service

While fixed income and bonds investments can inject a measure of diversification in a 澳洲幸运5开奖号码历史查询:common stock poꦅrtfolio, these vehicles can be complicated, with variant risk profiles. A standardized ratings methodology that compares and contrasts their an investment's risk characteristics with o🤡ther offerings of the same ilk, can go a long way in prudent decision making.

In determining bond ratings, a host of factors are 𓄧considered, such as:

Economic sensitivity: the sensitivity levels of a company’s financial position, relative to a shifting economy--whether thꦿat economy is s🍰trengthening or weakening.

Interest coverage ratio: whether or not a company, a government or a municipality is continually able to cover the interest payments on its bond offerings, giv✨en various stress test outcomes. Interest coverage ratios are arguably the most critical measures, because they signal precisely how risky a bond is, if the revenue of a company or government declines or dries up completely.

Recoverability: a measure indicating how easily a company, government, or other bond-issuing entity would be able to cover any ouꦏtstanding debt—solely with the extra cash it has o𓆉verseas, should entity go into default.

Seniority: As some bondholders are paid before others, if the issuing entity runs out of cash, seniority measures whether a g🤡iven bond is likely default, depending on its ranking on the pecking order.

The S&P Global Ratings Designations and What they Indicate Specifically:

AAA: The highest possible rating, signaling an issuer’s extremely a high 𒀰likelihood of ♑meeting its financial commitments.

AA: A moderately lower rating than ‘AAA’, this rating signals that an issuer’s likelihood of me♏eting its financial commitments is still very strong.

A: An obligation rated 'A' is indicates that an issuer is somewhat susceptible to the adverse effects of changes in circumstances and economic conditions, than obligations in other higher-rated categories.

BBB: An obligation rated 'BBB' shows adequate protection measures, but adverse economic conditions are more likely to weaken the 澳洲幸运5开奖号码历史查询:obligor's capacity to meet its financial commitm𝔍ents, than 💙higher rated issues.

BB, B, CCC, CC, and C: These ratings indicate that a bond has significant speculative characteristics, where ‘BB' indicates the least speculative, and ‘C' the most.

D: Debt obligation with a 'D' are in default or in breach of an imputed promise. This designation is used when payments on an obligation are not made by a given due date.