List of countries by credit rating financial articles
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List of countries by credit rating

By Wikipedia,
the free encyclopedia

http://en.wikipedia.org/

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This is a list of countries by credit rating, showing long-term sovereign credit ratings as reported by the three major credit rating agencies: Standard & Poor's, Fitch and Moody's.

Standard & Poor's

For S&P, a bond is considered investment grade if its credit rating is BBB- or higher. Bonds rated BB+ and below are considered to be speculative grade, sometimes also referred to as "junk" bonds.

Country Rating Outlook Date
 Abu Dhabi 20AA Stable Jul 2011
 Albania 09B+ Stable Jul 2011
 Andorra 17A Negative Jul 2011
 Angola 10BB- Stable Jul 2011
 Argentina 08B Stable Jul 2011
 Aruba 16A- Negative Jul 2011
 Australia 22AAA Stable Jul 2011
 Austria 22AAA Stable Jul 2011
 Azerbaijan 12BB+ Positive Jul 2011
 Bahamas 15BBB+ Stable Jul 2011
 Bahrain 14BBB Watch Negative Jul 2011
 Bahrain 10BB- Stable Jul 2011
 Barbados 13BBB- Stable Jul 2011
 Belarus 08B Watch Negative Jul 2011
 Belgium 21AA+ Negative Jul 2011
 Belize 08B Watch Negative Jul 2011
 Benin 08B Stable Jul 2011
 Bermuda 20AA Stable Jul 2011
 Bolivia 09B+ Stable Jul 2011
 Bosnia and Herzegovina 09B+ Stable Jul 2011
 Botswana 16A- Stable Jul 2011
 Brazil 13BBB- Stable Jul 2011
 Bulgaria 14BBB Stable Jul 2011
 Burkina Faso 08B Stable Jul 2011
 Cambodia 09B+ Stable Jul 2011
 Cameroon 08B Stable Jul 2011
 Canada 22AAA Stable Jul 2011
 Cape Verde 09B+ Stable Jul 2011
 Chile 18A+ Positive Jul 2011
 China 19AA- Stable Jul 2011
 Colombia 13BBB- Stable Jul 2011
 Cook Islands 10BB- Negative Jul 2011
 Costa Rica 11BB Stable Jul 2011
 Croatia 13BBB- Negative Jul 2011
 Cyprus 15BBB+ Negative Jul 2011
 Czech Republic 17A Stable Jul 2011
 Denmark 22AAA Stable Jul 2011
 Dominican Republic 09B+ Stable Jul 2011
 Ecuador 07B- Stable Jul 2011
 Egypt 11BB Negative Jul 2011
 El Salvador 10BB- Stable Jul 2011
 Ras Al Khaimah 17A Stable Jul 2011
 Estonia 17A Positive Jul 2011
 Fiji 07B- Stable Jul 2011
 Finland 22AAA Stable Jul 2011
 France 22AAA Stable Jul 2011
 Gabon 10BB- Stable Jul 2011
 Georgia 09B+ Stable Jul 2011
 Germany 22AAA Stable Jul 2011
 Ghana 08B Stable Jul 2011
 Greece 03CC Negative Jul 2011
 Grenada 07B- Stable Jul 2011
 Guatemala 11BB Stable Jul 2011
 Guernsey 22AAA Stable Jul 2011
 Honduras 08B Positive Jul 2011
 Hong Kong 22AAA Stable Jul 2011
 Hungary 13BBB- Negative Jul 2011
 Iceland 13BBB- Negative Jul 2011
 India 13BBB- Stable Jul 2011
 Indonesia 12BB+ Positive Jul 2011
 Ireland 15BBB+ Stable Jul 2011
 Isle of Man 22AAA Stable Jul 2011
 Israel 17A Stable Jul 2011
 Italy 18A+ Negative Jul 2011
 Jamaica 07B- Stable Jul 2011
 Japan 19AA- Negative Jul 2011
 Jordan 11BB Negative Jul 2011
 Kazakhstan 14BBB Stable Jul 2011
 Kenya 09B+ Stable Jul 2011
 South Korea 17A Stable Jul 2011
 Kuwait 20AA Stable Jul 2011
 Latvia 12BB+ Positive Jul 2011
 Lebanon 08B Stable Jul 2011
 Liechtenstein 22AAA Stable Jul 2011
 Lithuania 14BBB Stable Jul 2011
 Luxembourg 22AAA Stable Jul 2011
 Macedonia 11BB Stable Jul 2011
 Malaysia 16A- Stable Jul 2011
 Malta 17A Stable Jul 2011
 Mexico 14BBB Stable Jul 2011
 Mongolia 10BB- Stable Jul 2011
 Montenegro 11BB Negative Jul 2011
 Montserrat 13BBB- Positive Jul 2011
 Morocco 13BBB- Stable Jul 2011
 Mozambique 09B+ Stable Jul 2011
 Netherlands 22AAA Stable Jul 2011
 New Zealand 21AA+ Stable Jul 2011
 Nigeria 09B+ Stable Jul 2011
 Norway 22AAA Stable Jul 2011
 Oman 17A Watch Negative Jul 2011
 Pakistan 07B- Stable Jul 2011
 Panama 13BBB- Stable Jul 2011
 Papua New Guinea 09B+ Stable Jul 2011
 Paraguay 09B+ Positive Jul 2011
 Peru 13BBB- Stable Jul 2011
 Philippines 11BB Stable Jul 2011
 Poland 16A- Stable Jul 2011
 Portugal 13BBB- Negative Jul 2011
 Qatar 20AA Stable Jul 2011
 Romania 12BB+ Stable Jul 2011
 Russian Federation 14BBB Stable Jul 2011
 Saudi Arabia 19AA- Stable Jul 2011
 Senegal 09B+ Negative Jul 2011
 Serbia 11BB Stable Jul 2011
 Singapore 22AAA Stable Jul 2011
 Slovak Republic 18A+ Stable Jul 2011
 Slovenia 20AA Negative Jul 2011
 South Africa 15BBB+ Stable Jul 2011
 Spain 20AA Negative Jul 2011
 Sri Lanka 09B+ Stable Jul 2011
 Suriname 09B+ Stable Jul 2011
 Sweden 22AAA Stable Jul 2011
 Swiss Confederation 22AAA Stable Jul 2011
 Taiwan 19AA- Stable Jul 2011
 Thailand 15BBB+ Stable Jul 2011
 Trinidad and Tobago 17A Stable Jul 2011
 Tunisia 13BBB- Stable Jul 2011
 Turkey 11BB Positive Jul 2011
 Uganda 09B+ Stable Jul 2011
 Ukraine 09B+ Stable Jul 2011
 United Kingdom 22AAA Stable Jul 2011
 United States of America 22AAA Negative Jul 2011
 Uruguay 12BB+ Stable Jul 2011
 Venezuela 10BB- Stable Jul 2011
 Vietnam 10BB- Negative Jul 2011
 Zambia 09B+ Stable Jul 2011


Fitch

For Fitch, a bond is considered investment grade if its credit rating is BBB- or higher. Bonds rated BB+ and below are considered to be speculative grade, sometimes also referred to as "junk" bonds.

Country Rating Outlook Date
 Abu Dhabi 18AA Stable July 2007
 Angola 08BB- Stable May 2011
 Argentina 06B Stable July 2010
 Armenia 08BB- Stable August 2009
 Aruba 12BBB Stable June 2006
 Australia 20AAA Stable February 2003
 Austria 20AAA Stable September 2000
 Azerbaijan 11BBB- Positive May 2011
 Bahrain 13BBB+ Watch Negative March 2011
 Belgium 19AA+ Negative May 2011
 Benin 06B Stable September 2004
 Bermuda 20AAA Stable August 2006
 Bolivia 07B+ Stable October 2010
 Brazil 12BBB Stable April 2011
 Bulgaria 12BBB Positive May 2011
 Cameroon 05B- Stable March 2007
 Canada 20AAA Stable August 2004
 Cape Verde 08BB- Stable June 2009
 Chile 17AA- Stable February 2011
 China 17AA- Negative April 2011
 Colombia 11BBB- Positive June 2011
 Costa Rica 10BB+ Stable March 2011
 Croatia 12BBB Negative May 2009
 Cyprus 14A- Negative May 2011
 Czech Republic 17AA- Positive June 2010
 Denmark 20AAA Stable November 2003
 Dominican Republic 06B Positive January 2011
 Ecuador 05B- Stable November 2010
 Egypt 10BB+ Watch Negative February 2011
 El Salvador 09BB Negative June 2009
 Estonia 15A+ Stable July 2011
 Finland 20AAA Stable September 2000
 France 20AAA Stable September 2000
 Gabon 08BB- Stable October 2007
 Georgia 07B+ Positive March 2011
 Germany 20AAA Stable September 2000
 Ghana 07B+ Stable September 2010
 Greece 04CCC Watch Negative July 2011
 Guatemala 10BB+ Stable February 2006
 Hong Kong 19AA+ Stable November 2010
 Hungary 12BBB Negative December 2010
 Iceland 13BBB+ Stable May 2011
 India 11BBB- Stable June 2010
 Indonesia 10BB+ Positive February 2011
 Ireland 13BBB+ Negative April 2011
 Israel 16A+ Stable February 2008
 Italy 17AA- Stable October 2006
 Jamaica 05B- Stable February 2010
 Japan 17AA- Negative May 2011
 Kazakhstan 12BBB Positive December 2010
 Kenya 08BB- Stable January 2009
 South Korea 18AA Stable September 2009
 Kuwait 18AA Stable September 2008
 Latvia 12BBB Positive March 2011
 Lebanon 06B Stable March 2010
 Lesotho 09BB Negative May 2011
 Lithuania 13BBB+ Positive May 2011
 Luxembourg 20AAA Stable September 2000
 Macedonia 10BB+ Stable October 2010
 Malaysia 15A Stable June 2009
 Malta 16A+ Stable July 2007
 Mexico 13BBB+ Stable November 2009
 Mongolia 07B+ Stable November 2010
 Morocco 12BBB Stable April 2007
 Mozambique 07B+ Stable July 2003
 Namibia 12BBB Positive December 2010
 Netherlands 20AAA Stable July 2011
 New Zealand 20AAA Negative July 2009
 Nigeria 09BB Negative October 2010
 Norway 20AAA Stable September 2000
 Panama 11BBB- Positive March 2010
 Peru 12BBB Positive June 2010
 Philippines 10BB+ Stable February 2006
 Poland 15A Stable January 2007
 Portugal 11BBB- Watch Negative April 2011
 Ras al-Khaimah 15A Stable January 2008
 Romania 11BBB- Stable July 2011
 Russia 12BBB Positive September 2010
 Rwanda 06B Stable August 2010
 San Marino 15A Negative October 2009
 Saudi Arabia 17AA- Stable July 2008
 Serbia 08BB- Stable November 2010
 Seychelles 07B+ Stable February 2011
 Singapore 20AAA Stable May 2003
 Slovakia 16A+ Stable July 2008
 Slovenia 18AA Stable July 2006
 South Africa 15A Stable January 2011
 Spain 19AA+ Negative March 2011
 Sri Lanka 08BB- Stable July 2011
 Suriname 07B+ Stable October 2009
 Sweden 20AAA Stable March 2004
 Switzerland 20AAA Stable September 2000
 Taiwan 18AA Negative January 2009
 Thailand 14A- Stable May 2011
 Tunisia 12BBB Negative March 2011
 Turkey 10BB+ Positive November 2010
 Uganda 06B Positive August 2009
 Ukraine 06B Positive July 2011
 United Kingdom 20AAA Stable September 2000
 United States 20AAA Stable September 2000
 Uruguay 10BB+ Positive July 2010
 Venezuela 07B+ Stable December 2008
 Vietnam 07B+ Stable July 2010
 Zambia 07B+ Stable March 2011

Moody's

Country Rating Outlook Date
 Albania 08B1 Stable Jul 2011
 Angola 09Ba3 Stable Jul 2011
 Argentina 06B3 Stable Jul 2011
 Armenia 10Ba2 Stable Jul 2011
 Australia 21Aaa Stable Jul 2011
 Austria 21Aaa Stable Jul 2011
 Azerbaijan 11Ba1 Positive Jul 2011
 Bahamas 15A3 Stable Jul 2011
 Bahrain 14Baa1 Negative Jul 2011
 Bahrain 09Ba3 Stable Jul 2011
 Barbados 12Baa3 Negative Jul 2011
 Belarus 06B3 Watch Negative Jul 2011
 Belgium 20Aa1 Stable Jul 2011
 Belize 06B3 Stable Jul 2011
 Bermuda 19Aa2 Stable Jul 2011
 Bolivia 08B1 Positive Jul 2011
 Bosnia and Herzegovina 07B2 Negative Jul 2011
 Botswana 16A2 Negative Jul 2011
 Brazil 13Baa2 Positive Jul 2011
 Bulgaria 13Baa2 Stable Jul 2011
 Cambodia 07B2 Stable Jul 2011
 Canada 21Aaa Stable Jul 2011
 Cayman Islands 18Aa3 Stable Jul 2011
 Chile 18Aa3 Stable Jul 2011
 China 18Aa3 Positive Jul 2011
 Colombia 12Baa3 Stable Jul 2011
 Costa Rica 12Baa3 Stable Jul 2011
 Croatia 12Baa3 Stable Jul 2011
 Cuba 05Caa1 Stable Jul 2011
 Cyprus 14Baa1 Negative Jul 2011
 Czech Republic 17A1 Stable Jul 2011
 Denmark 21Aaa Stable Jul 2011
 Dominican Republic 08B1 Stable Jul 2011
 Ecuador 04Caa2 Stable Jul 2011
 Egypt 09Ba3 Negative Jul 2011
 El Salvador 10Ba2 Stable Jul 2011
 Estonia 17A1 Stable Jul 2011
 Fiji 08B1 Negative Jul 2011
 Finland 21Aaa Stable Jul 2011
 France 21Aaa Stable Jul 2011
 Georgia 09Ba3 Stable Jul 2011
 Germany 21Aaa Stable Jul 2011
 Greece 02Ca Negative Jul 2011
 Guatemala 11Ba1 Stable Jul 2011
 Honduras 07B2 Stable Jul 2011
 Hong Kong 20Aa1 Positive Jul 2011
 Hungary 12Baa3 Negative Jul 2011
 Iceland 12Baa3 Negative Jul 2011
 India 12Baa3 Stable Jul 2011
 Indonesia 11Ba1 Stable Jul 2011
 Ireland 11Ba1 Negative Jul 2011
 Isle of Man 21Aaa Stable Jul 2011
 Israel 17A1 Stable Jul 2011
 Italy 19Aa2 Watch Negative Jul 2011
 Jamaica 06B3 Stable Jul 2011
 Japan 19Aa2 Watch Negative Jul 2011
 Jordan 10Ba2 Negative Jul 2011
 Kazakhstan 13Baa2 Stable Jul 2011
 South Korea 17A1 Stable Jul 2011
 Kuwait 19Aa2 Stable Jul 2011
 Latvia 12Baa3 Positive Jul 2011
 Lebanon 08B1 Stable Jul 2011
 Lithuania 14Baa1 Stable Jul 2011
 Luxembourg 21Aaa Stable Jul 2011
 Macao 18Aa3 Stable Jul 2011
 Malaysia 15A3 Stable Jul 2011
 Malta 17A1 Stable Jul 2011
 Mauritius 13Baa2 Stable Jul 2011
 Mexico 14Baa1 Stable Jul 2011
 Moldova 06B3 Stable Jul 2011
 Mongolia 08B1 Stable Jul 2011
 Montenegro 09Ba3 Stable Jul 2011
 Morocco 11Ba1 Stable Jul 2011
 Netherlands 21Aaa Stable Jul 2011
 New Zealand 21Aaa Stable Jul 2011
 Nicaragua 06B3 Stable Jul 2011
 Norway 21Aaa Stable Jul 2011
 Oman 17A1 Stable Jul 2011
 Pakistan 06B3 Stable Jul 2011
 Panama 12Baa3 Stable Jul 2011
 Papua New Guinea 08B1 Stable Jul 2011
 Paraguay 08B1 Stable Jul 2011
 Peru 12Baa3 Positive Jul 2011
 Philippines 10Ba2 Stable Jul 2011
 Poland 16A2 Stable Jul 2011
 Portugal 10Ba2 Negative Jul 2011
 Qatar 19Aa2 Stable Jul 2011
 Romania 12Baa3 Stable Jul 2011
 Russia 14Baa1 Stable Jul 2011
 Saudi Arabia 18Aa3 Stable Jul 2011
 Senegal 08B1 Stable Jul 2011
 Singapore 21Aaa Stable Jul 2011
 Slovakia 17A1 Stable Jul 2011
 Slovenia 19Aa2 Stable Jul 2011
 South Africa 15A3 Stable Jul 2011
 Spain 19Aa2 Negative Jul 2011
 Sri Lanka 08B1 Positive Jul 2011
 St. Vincent & the Grenadines 08B1 Stable Jul 2011
 Suriname 08B1 Stable Jul 2011
 Sweden 21Aaa Stable Jul 2011
 Switzerland 21Aaa Stable Jul 2011
 Taiwan 18Aa3 Stable Jul 2011
 Thailand 14Baa1 Stable Jul 2011
 Trinidad and Tobago 14Baa1 Stable Jul 2011
 Tunisia 12Baa3 Negative Jul 2011
 Turkey 10Ba2 Positive Jul 2011
 Ukraine 07B2 Stable Jul 2011
 United Arab Emirates 19Aa2 Stable Jul 2011
 United Kingdom 21Aaa Stable Jul 2011
 United States of America 21Aaa Watch Negative Jul 2011
 Uruguay 11Ba1 Stable Jul 2011
 Venezuela 07B2 Stable Jul 2011
 Vietnam 08B1 Negative Jul 2011

Not rated

UN member states that have not been assigned a credit rating by any of the three major rating agencies.

Country Details
 Afghanistan
 Algeria
 Antigua and Barbuda
 Bhutan
 Brunei Darussalam
 Burundi
 Central African Republic
 Chad
 Comoros
 Congo
 Democratic Republic of Congo
 Cote d'Ivoire
 Djibouti
 Dominica
 Equatorial Guinea
 Eritrea
 Ethiopia
 Gambia Fitch has suspended Gambia’s credit rating after its only traded international bond expired.
 Guinea
 Guinea-Bissau
 Guyana
 Haiti
 Iran Fitch has withdrawn all ratings for Iran following the maturity and full repayment of the last outstanding sovereign eurobond on 21 April 2008.
 Iraq
 Kiribati
 North Korea
 Kyrgyzstan
 Laos
 Liberia
 Libya Fitch has withdrawn all ratings for Libya because it doesn't have enough information to maintain coverage of the issuer.
 Madagascar
 Malawi
 Maldives
 Mali Mali was given a credit rating in 2004 as part of a UN development initiative, but the rating was later withdrawn.
 Marshall Islands
 Mauritania
 Federated States of Micronesia
 Monaco
 Myanmar
 Nauru
 Nepal
 Niger
 Palau
 Saint Kitts and Nevis
 Saint Lucia
 Samoa
 Sao Tome and Principe
 Sierra Leone
 Solomon Islands
 Somalia
 South Sudan
 Sudan
 Swaziland
 Syria
 Tajikistan
 Tanzania
 Timor Leste
 Togo
 Tonga
 Turkmenistan Moody has withdrawn its rating because it had insufficient information to maintain coverage of the issuer.
 Tuvalu
 Uzbekistan The Uzbek government aims to obtain a sovereign credit rating by 2015.
 Vanuatu
 Yemen
 Zimbabwe



Credit rating

By Wikipedia,
the free encyclopedia

http://en.wikipedia.org/



A credit rating evaluates the credit worthiness of an issuer of specific types of debt, specifically, debt issued by a business enterprise such as a corporation or a government. It is an evaluation made by credit rating agency of the debt issuers likelihood of default. Credit ratings are determined by credit ratings agencies. The credit rating represents the credit rating agency's evaluation of qualitative and quantitative information for a company or government; including non-public information obtained by the credit rating agencies analysts. Credit ratings are not based on mathematical formulas. Instead, credit rating agencies use their judgment and experience in determining what public and private information should be considered in giving a rating to a particular company or government. The credit rating is used by individuals and entities that purchase the bonds issued by companies and governments to determine the likelihood that the government will pay its bond obligations.

Credit ratings are often confused with credit scores. Credit scores are the output of mathematical algorithms that assign numerical values to information in an individual's credit report. The credit report contains information regarding the financial history and current assets and liabilities of an individual. A bank or credit card company will use the credit score to estimate the probability that the individual will pay back loan or will pay back charges on a credit card. However, in recent years, credit scores have also been used to adjust insurance premiums, determine employment eligibility, as a factor considered in obtaining security clearances and establish the amount of a utility or leasing deposit.

A poor credit rating indicates a credit rating agency's opinion that the company or government has a high risk of defaulting, based on the agency's analysis of the entity's history and analysis of long term economic prospects. A poor credit score indicates that in the past, other individuals with similar credit reports defaulted on loans at a high rate. The credit score does not take into account future prospects or changed circumstances. For example, if an individual received a credit score of 400 on Monday because he had a history of defaults, and then won the Powerball on Tuesday, his credit score would remain 400 on Tuesday because his credit report does not take into account his improved future prospects.

Credit scores

An individual's credit score, along with his credit report, affects his or her ability to borrow money through financial institutions such as banks.

The factors that may influence a person's credit score are:

- ability to pay a loan
- interest
- amount of credit used
- saving patterns
- spending patterns
- debt

In different parts of the world different personal credit score systems exist.

North America

In the United States, an individual's credit history is compiled and maintained by companies called credit bureaus. Credit worthiness is usually determined through a statistical analysis of the available credit data.

- A common form of this analysis is a 3-digit credit score. The most common form of credit score, know as the FICO credit score, was developed by Fair Isaac Corporation, however, the actual score is computed by credit bureaus.
- The term FICO is a registered trademark of Fair Isaac Corporation, which pioneered the credit rating concept in the late 1950s.

In Canada, individuals actually receive credit ratings such as the North American Standard Account Ratings, also known as the "R" ratings, which have a range between R0 and R9. R0 refers to a new account; R1 refers to on-time payments; R9 refers to bad debt. Very few people maintain the R0 status for long, as there are similar mechanisms in place in Canada that would allow for monthly updates of one's credit rating.

Australasia (Australia and NZ)

In Australia, The Australian Government "Office of the Privacy Commissioner" provides information on how to obtain a copy of your credit report. Personal credit reports in Australia are generally required to be given free of charge.

There are two main credit reporting agencies, "Veda Advantage" and "Dun & Bradstreet"

People living in Tasmania can also contact "Tasmanian Collection Service"

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.

S&P's ratings of European countries (June 2011)

S&P's ratings of European countries (June 2011).

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

Sovereign credit ratings

A sovereign credit rating is the credit rating of a sovereign entity, i.e. a national government. The sovereign credit rating indicates the risk level of the investing environment of a country and is used by investors looking to invest abroad. It takes political risk into account.

The table shows the ten least-risky countries for investment as of September 2010. Ratings are further broken down into components including political risk, economic risk. Euromoney's bi-annual country risk index "Country risk survey" monitors the political and economic stability of 185 sovereign countries. Results focus foremost on economics, specifically sovereign default risk and/or payment default risk for exporters (a.k.a. "trade credit" risk).

A.M. Best defines "country risk" as the risk that country-specific factors could adversely affect an insurer's ability to meet its financial obligations.

Country risk rankings (September 2010) Least risky countries, Score out of 100 Source: Euromoney Country risk September 2010
Rank Previous Country Overall score
1
1
Norway
93.33
2
3
Switzerland
90.22
3
6
Sweden
88.93
4
4
Denmark
88.80
5
5
Finland
88.55
6
2
Luxembourg
88.27
7
8
Canada
88.26
8
9
Netherlands
88.20
9
16
Hong Kong
87.18
10
10
Australia
86.18


Short-term rating

A short-term rating is a probability factor of an individual going into default within a year. This is in contrast to long-term rating which is evaluated over a long timeframe. In the past insitutional investors preferred to consider long-term ratings. Nowadays, short-term ratings are commonly used. First, the Basel II agreement requires banks to report their one-year probability if they applied internal-ratings-based approach for capital requirements. Second, many institutional investors can easily manage their credit/bond portfolios with derivatives on monthly or quarterly basis. Therefore, some rating agencies simply report short-term ratings. In Greater China, CTRISKS is the first CRA providing short-term ratings on sovereign risk, bank risk and corporations in the region.

Credit bureaus and credit rating agencies

Credit scores for individuals are assigned by credit bureaus (US; UK: credit reference agencies). Credit ratings for corporations and sovereign debt are assigned by credit rating agencies.

In the United States, the main credit bureaus are Experian, Equifax, and TransUnion. A relatively new credit bureau in the US is Innovis.

In the United Kingdom, the main credit reference agencies for individuals are Experian, Equifax, and Callcredit. There is no universal credit score as such, rather each individual lender credit scores based on its own wish-list of a perfect customer.

In Canada, the main credit bureaus for individuals are Equifax, TransUnion and Northern Credit Bureaus/ Experian.

In India, commercial credit rating agencies include CRISIL, CARE, ICRA and Brickwork Ratings. The credit bureaus for individuals in India are Credit Information Bureau (India) Limited (CIBIL) and Credit Registration Office (CRO).

In Hong Kong, the locally-based credit rating agency is CTRISKS. The firm offers sovereign ratings on major economies, bank ratings on banks in China, Taiwan, Hong Kong and Macau, obligor ratings on 4000 listed companies in Greater China, bonds ratings on 1000+ bonds in China, Taiwan and Hong Kong and product risk ratings on 1000+ investment products.

The largest credit rating agencies (which tend to operate worldwide) are Dun & Bradstreet, Moody's, Standard and Poor's and Fitch Ratings.

On 14.07.2010 Dagong International Credit Rating Co. from China released a credit rating that is a break with other western credit rating agencies in an attempt to compete with them.

Information and Rating Agency Credo Line is the only Rating Agency in Ukraine which assigns short-term and long-term credit ratings to Ukrainian, CIS and Eastern-European importing companies in the course of their foreign economic activity and trade financing, in particular.


Bond credit rating

By Wikipedia,
the free encyclopedia

http://en.wikipedia.org/



In investment, the bond credit rating assesses the credit worthiness of a corporation's or government debt issues. It is analogous to credit ratings for individuals. 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 Moody's, Standard & Poor's, and Fitch Ratings to have letter designations (such as AAA, B, CC) which represent the quality of a bond. Bond ratings below BBB/Baa are considered to be not investment grade and are colloquially called junk bonds.

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

Credit rating agencies

Credit rating agencies registered as such with the SEC are known as “Nationally Recognized Statistical Rating Organizations.” The following firms are currently registered as NRSROs: A.M. Best Company, Inc.; DBRS Ltd.; Egan-Jones Rating Company; Fitch, Inc.; Japan Credit Rating Agency, Ltd.; LACE Financial Corp.; Moody’s Investors Service, Inc.; Rating and Investment Information, Inc.; and Standard & Poor’s Ratings Services. Under the Credit Rating Agency Reform Act, an NRSRO may be registered with respect to up to five classes of credit ratings: (1) financial institutions, brokers, or dealers; (2) insurance companies; (3) corporate issuers; (4) issuers of asset-backed securities; and (5) issuers of government securities, municipal securities, or securities issued by a foreign government.

S&P, Moody's, and Fitch dominate the market with approximately 90-95 percent of world market share.

Credit Rating Tiers

Moody's assigns bond credit ratings of Aaa, Aa, A, Baa, Ba, B, Caa, Ca, C, with WR and NR as withdrawn and not rated. Standard & Poor's and Fitch assign bond credit ratings of AAA, AA, A, BBB, BB, B, CCC, CC, C, D.

As of April 2011, there were 4 companies rated AAA by S&P:

- Automatic Data Processing (NYSE:ADP)
- Johnson & Johnson (NYSE:JNJ)
- Microsoft (NASDAQ:MSFT)
- ExxonMobil (NYSE:XOM)

Moody's, S&P and Fitch will all also assign intermediate ratings at levels between AA and CCC (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).

Moody's Standard & Poor's Fitch Credit worthiness
Aaa AAA AAA An obligor has EXTREMELY STRONG capacity to meet its financial commitments.
Aa1 AA+ AA+ An obligor has VERY STRONG capacity to meet its financial commitments. It differs from the highest rated obligors only in small degree.
Aa2 AA AA
Aa3 AA- AA-
A1 A+ A+ An obligor 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.
A2 A A
A3 A- A-
Baa1 BBB+ BBB+ An obligor 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.
Baa2 BBB BBB
Baa3 BBB- BBB-
Ba1 BB+ BB+ An obligor 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.
Ba2 BB BB
Ba3 BB- BB-
B1 B+ B+ An obligor 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.
B2 B B
B3 B- B-
Caa CCC CCC An obligor is CURRENTLY VULNERABLE, and is dependent upon favourable business, financial, and economic conditions to meet its financial commitments.
Ca CC CC An obligor is CURRENTLY HIGHLY-VULNERABLE.
C C The obligor is CURRENTLY HIGHLY-VULNERABLE to nonpayment. May be used where a bankruptcy petition has been filed.
C D D An obligor has failed to pay one or more of its financial obligations (rated or unrated) when it became due.
e, p pr Expected Preliminary ratings may be assigned to obligations pending receipt of final documentation and legal opinions. The final rating may differ from the preliminary rating.
WR Rating withdrawn for reasons including: debt maturity, calls, puts, conversions, etc., or business reasons (e.g. change in the size of a debt issue), or the issuer defaults.
unsolicited unsolicited This rating was initiated by the ratings agency and not requested by the issuer.
SD RD This rating is assigned when the agency believes that the obligor has selectively defaulted on a specific issue or class of obligations but it will continue to meet its payment obligations on other issues or classes of obligations in a timely manner.
NR NR NR No rating has been requested, or there is insufficient information on which to base a rating.

Investment grade

A bond is considered investment grade or IG if its credit rating is BBB- or higher by Standard & Poor's or Baa3 or higher by Moody's or BBB(low) or higher by DBRS. Generally they are bonds that are judged by the rating agency as likely enough to meet payment obligations that banks are allowed to invest in them.

Ratings play a critical role in determining how much companies and other entities that issue debt, including sovereign governments, have to pay to access credit markets, i.e., the amount of interest they pay on their issued debt. The threshold between investment-grade and speculative-grade ratings has important market implications for issuers' borrowing costs.

Bonds that are not rated as investment-grade bonds are known as high yield bonds or more derisively as junk bonds.

The risks associated with investment-grade bonds (or investment-grade corporate debt) are considered noticeably higher than in the case of first-class government bonds. The difference between rates for first-class government bonds and investment-grade bonds is called investment-grade spread. It is an indicator for the market's belief in the stability of the economy. The higher these investment-grade spreads (or risk premiums) are, the weaker the economy is considered.

Criticism

Until the early 1970s, bond credit ratings agencies were paid for their work by investors who wanted impartial information on the credit worthiness of securities issuers and their particular offerings. Starting in the early 1970s, the "Big Three" ratings agencies (S&P, Moody's, and Fitch) began to receive payment for their work by the securities issuers for whom they issue those ratings, which has led to charges that these ratings agencies can no longer always be impartial when issuing ratings for those securities issuers. Securities issuers have been accused of "shopping" for the best ratings from these three ratings agencies, in order to attract investors, until at least one of the agencies delivers favorable ratings. This arrangement has been cited as one of the primary causes of the subprime mortgage crisis (which began in 2007), when some securities, particularly mortgage backed securities (MBSs) and collateralized debt obligations (CDOs) rated highly by the credit ratings agencies, and thus heavily invested in by many organizations and individuals, were rapidly and vastly devalued due to defaults, and fear of defaults, on some of the individual components of those securities, such as home loans and credit card accounts.

Municipal Bonds

Municipal bonds, instruments issued by local, state, or federal governments in the United States, have a separate naming/classification system which mirrors the tiers for corporate bonds.

Default Rates

The historical default rate for municipal bonds is lower than that of corporate bonds. The Municipal Bond Fairness Act (HR 6308), introduced September 9, 2008, included the following table giving bond default rates up to 2007 for municipal versus corporate bonds by rating and rating agency.

Cumulative Historic Default Rates (in percent)
Rating categories Moody's S&P
Municipal Corporate Municipal Corporate
Aaa/AAA 0.00 0.52 0.00 0.60
Aa/AA 0.06 0.52 0.00 1.50
A/A 0.03 1.29 0.23 2.91
Baa/BBB 0.13 4.64 0.32 10.29
Ba/BB 2.65 19.12 1.74 29.93
B/B 11.86 43.34 8.48 53.72
Caa-C/CCC-C 16.58 69.18 44.81 69.19
Investment Grade 0.07 2.09 0.20 4.14
Non-Invest Grade 4.29 31.37 7.37 42.35
All 0.10 9.70 0.29 12.98

A potential misuse of historic default statistics is to assume that historical average default rates represent the "probability of default" of debt in a particular rating category. However, [...] default rates can vary significantly from one year to the next and the observed rate for any given year can vary significantly from the average.

Standard & Poor's One-Year Global Corporate Default Rates By Refined Rating Category, 1981-2008
Year AAA AA+ AA AA- A+ A A- BBB+ BBB BBB- BB+ BB BB- B+ B B- CCC to C
1981 0 0 0 0 0 0 0 0 0 0 0 0 0 0 3.28 0 0
1982 0 0 0 0 0 0.33 0 0 0.68 0 0 2.86 7.04 2.22 2.33 7.41 21.43
1983 0 0 0 0 0 0 0 0 0 1.33 2.17 0 1.59 1.22 9.80 4.76 6.67
1984 0 0 0 0 0 0 0 0 1.40 0 0 1.64 1.49 2.13 3.51 7.69 25.00
1985 0 0 0 0 0 0 0 0 0 0 1.64 1.49 1.33 2.59 13.11 8.00 15.38
1986 0 0 0 0 0 0 0.78 0 0.78 0 1.82 1.18 1.12 4.65 12.16 16.67 23.08
1987 0 0 0 0 0 0 0 0 0 0 0 0 0.83 1.31 5.95 6.82 12.28
1988 0 0 0 0 0 0 0 0 0 0 0 0 2.33 1.98 4.50 9.80 20.37
1989 0 0 0 0 0 0 0 0.90 0.78 0 0 0 1.98 0.43 7.80 4.88 31.58
1990 0 0 0 0 0 0 0 0.76 0 1.10 2.78 3.06 4.46 4.87 12.26 22.58 31.25
1991 0 0 0 0 0 0 0 0.83 0.74 0 3.70 1.11 1.05 8.72 16.25 32.43 33.87
1992 0 0 0 0 0 0 0 0 0 0 0 0 0 0.72 14.93 20.83 30.19
1993 0 0 0 0 0 0 0 0 0 0 0 1.92 0 1.30 5.88 4.17 13.33
1994 0 0 0 0 0.45 0 0 0 0 0 0 0.86 0 1.83 6.58 3.23 16.67
1995 0 0 0 0 0 0 0 0 0 0.63 0 1.55 1.11 2.76 8.00 7.69 28.00
1996 0 0 0 0 0 0 0 0 0 0 0.86 0.65 0.55 2.33 3.74 3.92 4.17
1997 0 0 0 0 0 0 0 0.36 0.34 0 0 0 0.41 0.72 5.19 14.58 12.00
1998 0 0 0 0 0 0 0 0 0.54 0.70 1.29 1.06 0.72 2.57 7.47 9.46 42.86
1999 0 0 0 0.36 0 0.24 0.27 0 0.28 0.30 0.54 1.33 0.90 4.20 10.55 15.45 32.35
2000 0 0 0 0 0 0.24 0.56 0 0.26 0.88 0 0.80 2.29 5.60 10.66 11.50 34.12
2001 0 0 0 0 0.57 0.49 0 0.24 0.48 0.27 0.49 1.19 6.27 5.94 15.74 23.31 44.55
2002 0 0 0 0 0 0 0 1.11 0.65 1.31 1.50 1.74 4.62 3.69 9.63 19.53 44.12
2003 0 0 0 0 0 0 0 0 0.19 0.52 0.48 0.94 0.27 1.70 5.16 9.23 33.13
2004 0 0 0 0 0 0.23 0 0 0 0 0 0.64 0.76 0.46 2.68 2.82 15.11
2005 0 0 0 0 0 0 0 0 0.17 0 0.36 0 0.25 0.78 2.59 2.98 8.87
2006 0 0 0 0 0 0 0 0 0 0 0.36 0 0.48 0.54 0.78 1.58 13.08
2007 0 0 0 0 0 0 0 0 0 0 0 0.30 0.23 0.19 0 0.88 14.81
2008 0 0 0.43 0.40 0.31 0.21 0.58 0.18 0.59 0.71 1.14 0.63 0.63 2.97 3.29 7.02 26.53


Summary statistic AAA AA+ AA AA- A+ A A- BBB+ BBB BBB- BB+ BB BB- B+ B B- CCC to C
Mean 0 0 0.02 0.03 0.05 0.06 0.08 0.16 0.28 0.28 0.68 0.89 1.53 2.44 7.28 9.97 22.67
Median 0 0 0 0 0 0 0 0 0.08 0 0.18 0.83 0.86 2.06 6.27 7.69 22.25
Minimum 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Maximum 0 0 0.43 0.40 0.57 0.49 0.78 1.11 1.40 1.33 3.70 3.06 7.04 8.72 16.25 32.43 44.55
Standard Deviation 0 0 0.08 0.10 0.14 0.13 0.20 0.32 0.36 0.43 0.96 0.84 1.83 2.02 4.51 7.82 11.93


Standard & Poor's One-Year Global Structured Finance Default Rates By Refined Rating Category, 1978-2008
Year AAA AA+ AA AA- A+ A A- BBB+ BBB BBB- BB+ BB BB- B+ B B- CCC to C
1993 0 0 0 0 0 0 0 0 0 0 0 0 0 0 6.25 0
1994 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1.85 0 0
1995 0 0 0 0 0 0 0 0 0.43 0 0 0.98 0 0 0.95 0 52.63
1996 0 0 0 0 0 0.15 0 0 0 0 0 0.61 12.50 0 0 31.03
1997 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 20.69
1998 0 0 0 0 0 1.04 0.91 0 0.19 0 0 1.03 0 0 2.34 0 22.58
1999 0 0 0 0 0 0 0.77 0 0 0.39 0 0 0 0 1.54 0 19.35
2000 0 0 0 0 0 0 0 0 0.11 0 0 0.61 0 0 2.19 0 5.26
2001 0.05 0 0 0 0 0.12 0 2.22 0 0.86 0.83 0.55 0.91 2.00 2.69 3.27 26.87
2002 0 0 0.06 0 0.27 0.14 0 1.77 0.19 0.70 1.26 2.03 1.12 2.50 3.60 23.24 27.03
2003 0 0 0 0 0.19 0.03 0.16 0.20 0.60 0.50 0.75 0.84 1.43 3.28 1.64 5.15 32.58
2004 0 0 0 0 0 0 0 0 0.16 0.17 0.50 0.81 0.29 0.79 2.23 3.56 13.79
2005 0 0 0 0 0 0 0 0 0.08 0.06 0.15 0.14 0.45 0.33 1.34 2.53 16.08
2006 0 0 0 0 0 0 0 0 0.06 0.20 0 0.33 0.36 0.26 0.36 1.42 19.18
2007 0.04 0.03 0.07 0.08 0 0.10 0.21 0.48 0.47 1.27 5.07 1.61 1.53 0.68 1.55 1.47 24.11
2008 0.53 0.35 0.57 1.15 1.15 0.87 1.42 2.27 1.26 3.45 5.60 4.21 5.07 8.53 12.84 10.28 56.92


Summary statistic AAA AA+ AA AA- A+ A A- BBB+ BBB BBB- BB+ BB BB- B+ B B- CCC to C
Mean 0.02 0.01 0.02 0.05 0.06 0.08 0.14 0.37 0.16 0.38 3.56 0.81 1.24 1.22 2.18 2.83 16.73
Median 0 0 0 0 0 0 0 0 0 0 0 0.61 0 0.26 1.55 0 17.63
Minimum 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Maximum 0.53 0.35 0.57 1.15 1.15 1.04 1.42 2.27 1.26 3.45 57.14 4.21 12.50 8.53 12.84 23.24 56.92
Standard Deviation 0.09 0.07 0.10 0.23 0.23 0.24 0.35 0.76 0.29 0.78 12.39 1.02 2.90 2.20 2.93 5.59 16.60

 





Published - August 2011




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