Standard & Poor's

From Free net encyclopedia

Standard & Poor's (S&P) is a subsidiary of McGraw-Hill that publishes financial research and analysis on stocks and bonds. It is one of the top three players in this business, along with Moody's and Fitch Ratings.

It is well known for its US-based S&P 500 and the Australian S&P 200 stock market index.

1 Credit ratings
- 1.1 Long-Term Credit Ratings
- 1.2 Short-Term Issue Credit Ratings
2 Publications
3 See also
4 External links

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Credit ratings

As a credit rating agency, Standard & Poor's issues credit ratings for the debt of companies. As such, it is designated a Nationally Recognized Statistical Rating Organization by the U.S. Securities and Exchange Commission.

It issues both short-term and long-term credit ratings.

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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 (i.e., BBB+, BBB and BBB-). For some companies, S&P may also offer guidance (termed a "credit watch") 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 (also known as junk bonds)

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

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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 committment 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 ecnomic 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 a 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 favourable 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.

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Publications

Standard & Poor's publishes a weekly (48 times a year) stock market analysis newsletter called The Outlook which is issued both in print and online to subscribers.

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