Standard & Poor's (S&P) is a US-based financial services company, owned McGraw-Hill Companies that publishes financial research and analysis on stocks and bonds. It is well known for the stock market indices like the US-based S&P 500, India's S&P CNX Nifty etc. It is one among the big three credit rating agencies. Others are Moody's and Fitch Group, Moody's is US-based, while Fitch is French based. All these rating agencies - S&P, Moody's and Fitch - analyze risk and give debt a "grade" that reflects the borrower's ability to pay the underlying loans.
Investment Grade
- AAA: the best quality borrowers, reliable and stable (many of them governments)
- AA: quality borrowers, a bit higher risk than AAA (divided into AA+,AA and AA-)
- A: quality borrowers whose financial stability could be affected by certain economic situations (divided into A+ A)
- BBB: medium class borrowers, 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
India's S&P Rating
- India currently holds an S&P rating of BBB-
- AAA countries in the world - UK, Australia, Singapore etc
- China and US hold AA+ rating
Latest News on S&P and India
- April 7,2011 : S&P affirms India's ratings
0 comments: