Standard & Poor's (S&P) Rating Scale
Standard & Poor’s publishes financial research and analysis on stocks and bonds, including issuing both long-term and short-term credit ratings for the debt of companies.
Long-Term Credit Ratings
S&P rates companies on a scale from AAA to D. Intermediate ratings are offered at each level between AA and B. For some companies, S&P may also offer guidance as to whether it is likely to be upgraded (positive), downgraded (negative) or uncertain (neutral).
Investment Grade
- AAA: the best quality companies, reliable and stable
- AA: quality companies, a bit higher risk than AAA
- A: economic situation can affect finance
- BBB: medium class companies, which are satisfactory at the moment
Non-Investment Grade
- BB: more prone to changes in the economy
- B: financial situation varies noticeably
- CCC: currently vulnerable and dependent on favorable economic conditions to meet its commitments
- CC: highly vulnerable, very speculative bonds
- C: highly vulnerable, perhaps in bankruptcy or in arrears but still continuing to pay out on obligations
- CI: past due on interest
- R : under regulatory supervision due to its financial situation
- SD: has selectively defaulted on some obligations
- D: has defaulted on obligations and S&P believes that it will generally default on most or all obligations
- NR: not rated
Short-Term Issue Credit Ratings
S&P rates specific issues on a scale from A-1 to D. Within the A-1 category it can be designated with a plus sign (+). This indicates that the issuer's commitment to meet its obligation is extremely strong. Country risk and currency of repayment of the obligor to meet the issue obligation are factored into the credit analysis and reflected in the issue rating.
- A-1: obligor's capacity to meet its financial commitment on the obligation is strong
- A-2: is susceptible to adverse economic conditions however the obligor's capacity to meet its financial commitment on the obligation is satisfactory
- A-3: adverse economic conditions are likely to weaken the obligor's capacity to meet its financial commitment on the obligation
- B: has significant speculative characteristics. The obligor currently has the capacity to meet its financial obligation but faces major ongoing uncertainties that could impacts its financial commitment on the obligation
- C: currently vulnerable to nonpayment and is dependent upon favorable business, financial and economic conditions for the obligor to meet its financial commitment on the obligation
- D: is in payment default. Obligation not made on due date and grace period may not have expired. The rating is also used upon the filing of a bankruptcy petition.
