Bond credit rating
From Wikipedia, the free encyclopedia
In investment, the credit rating assesses the credit worthiness of a corporation. It is analogous to credit ratings for individuals and countries. The credit rating is a financial indicator to potential investors of debt securities such as bonds. These are assigned by credit rating agencies such as Standard & Poor's and have letter designations such as AAA, B, CC.
In the United States, there are five corporations that have received the Nationally Recognized Statistical Rating Organization (NRSRO) designation, and are overseen by the SEC in their assignment of credit ratings: Standard & Poor's (S&P), Moody's, Fitch, A. M. Best and Dominion Bond Rating Service. S&P, Moody's, and Fitch are far larger than A.M. Best and Dominion, and dominate the market.
Moody's assigns bond credit ratings of Aaa, Aa, A, Baa, Ba, B, Caa, Ca, C, . Standard & Poor's and Fitch assign bond credit ratings of AAA, AA, A, BBB, BB, B, CCC, CC, C, D.
Moody's, S&P and Fitch will all also assign intermediate ratings at levels between AA and B (e.g., BBB+, BBB and BBB-), and may also choose to offer guidance (termed a "credit watch") as to whether it is likely to be upgraded (positive), downgraded (negative) or uncertain (neutral).
As of 2005, there are only 9 companies rated AAA by all three major credit agencies:
- Automatic Data Processing
- Berkshire Hathaway
- ExxonMobil
- General Electric
- Johnson & Johnson
- Pfizer
- Toyota Motor Corporation
- United Parcel Service
- Northwestern Mutual Financial Network
