- Find a Rating
- Research & Analysis
- Products & Capabilities
- Understanding Ratings
Guides & Tools
- Company Info
What Credit Ratings Are, And Are Not
Here is the general meaning of our credit rating opinion:
‘AAA’—Extremely strong capacity to meet financial commitments. Highest Rating.
‘AA’—Very strong capacity to meet financial commitments.
‘A’—Strong capacity to meet financial commitments, but somewhat susceptible to adverse economic conditions and changes in circumstances.
‘BBB’—Adequate capacity to meet financial commitments, but more subject to adverse economic conditions.
‘BBB-‘—Considered lowest investment grade by market participants.
‘BB+’—Considered highest speculative grade by market participants.
‘BB’—Less vulnerable in the near-term but faces major ongoing uncertainties to adverse business, financial and economic conditions.
‘B’—More vulnerable to adverse business, financial and economic conditions but currently has the capacity to meet financial commitments.
‘CCC’—Currently vulnerable and dependent on favorable business, financial and economic conditions to meet financial commitments.
‘CC’—Currently highly vulnerable.
‘C’—Currently highly vulnerable obligations and other defined circumstances.
‘D’—Payment default on financial commitments.
Note: Ratings from ‘AA’ to ‘CCC’ may be modified by the addition of a plus (+) or minus (-) sign to show relative standing within the major rating categories.
Specific ratings are also available from Standard & Poor’s Ratings Desk by emailing email@example.com.
Click here for more information about S&P rating products and a full explanation of rating symbology.
While investors may factor credit ratings into their investment decisions, Standard & Poor’s ratings are NOT indications of investment merit. In other words, ratings are not buy, sell, or hold recommendations, or a measure of asset value. And they are not intended to signal the suitability of an investment for any person or institution. They speak to one aspect of an investment decision—credit quality—which in some cases, may include our view of what investors can expect to recover in the event of default.
Credit ratings are just one of many factors -- including the current make-up of their portfolios, their investment strategy and time horizon, their tolerance for risk and an estimation of the securities relative value in comparison to other securities they might choose – that we expect market participants to consider when evaluating debt securities. By way of analogy, while reputation for dependability may be an important consideration in buying a car, it is not the sole determinant in the purchase decision. It depends on individual needs and requirements.
Because no one can predict the future, the assignment of credit ratings is not an exact science. For this reason, Standard & Poor’s ratings opinions are not intended as guarantees of credit quality or as exact measures of the probability that a particular issuer or particular debt issue will default. Instead, ratings express relative opinions about the creditworthiness of an issuer or credit quality of an individual debt issue, from strongest to weakest, within a universe of credit risk. The likelihood of default is the single most important factor in our assessment of creditworthiness.
For example, a corporate bond that is rated ‘AA’ is viewed by Standard & Poor’s as having a higher credit quality than a corporate bond with a ‘BBB’ rating. But the ‘AA’ rating isn’t a guarantee that it will not default, only that, in our opinion, it is less likely to default than the ‘BBB’ bond.
“The only thing constant is change”. And credit ratings can change.
Reasons for ratings adjustments vary, and may be broadly related to overall shifts in the economy or business environment or more narrowly focused on circumstances affecting a specific industry, entity, or individual debt issue.
In some cases, changes in the business climate can affect the credit risk of a wide array of issuers and securities. For instance, new competition or technology, beyond what might have been expected and factored into the ratings, may hurt a company's expected earnings performance, which could lead to one or more rating downgrades over time. Growing or shrinking debt burdens, hefty capital spending requirements, and regulatory changes may also trigger ratings changes.
While some risk factors may affect all issuers—an example would be growing inflation that affects interest rate levels and the cost of capital—other risk factors may pertain only to a narrow group of issuers and debt issues. For instance, the creditworthiness of a state or municipality may be impacted by population shifts or lower incomes of taxpayers, which reduce tax receipts and ability to repay debt.
Credit ratings are forward-looking opinions about credit risk.
Standard & Poor’s credit ratings express our opinion about the ability and willingness of an issuer, such as a corporation or state or city government, to meet its financial obligations in full - and on time.
Beyond that, credit ratings can also speak to the credit quality of an individual debt issue, such as a corporate note, a municipal bond or a mortgage-backed security, and the relative likelihood that the issue may default.
Ratings are provided by organizations such as Standard & Poor’s, commonly called credit rating agencies, which specialize in evaluating credit risk. At Standard & Poor’s, our mission is to provide high-quality, independent, and rigorous analytical information to the marketplace.
Each agency applies its own methodology in measuring creditworthiness and uses a specific rating scale to publish its ratings opinions. Typically, ratings are expressed as letter grades that range, for example, from ‘AAA’ to ‘D’ to communicate the agency’s opinion of relative level of credit risk.
For more information view the detailed Ratings Definitions
Covering 129 countries, our nearly 1,400 dedicated analysts conduct their work without financial self-interest in the outcome. Learn more
Our ratings foster the development and smooth functioning of capital markets. Capital allows people to start and grow businesses, cities and states to build highways and hospitals, and manufacturers to build factories and create jobs. Learn more
Our ratings are a tool to evaluate credit risk, expressing our opinion about the likelihood that debt issued by companies and governments will be repaid in full and on time. Learn more
For many decades, Standard & Poor’s Ratings Services has served the capital markets with opinions on the creditworthiness of companies, countries, local governments and others. We have used the lessons learned from the financial crisis to improve the methodologies, procedures and rigor underlying our ratings. Since 2007, the company has invested more than $400 million in governance, systems, analytics and methodologies that we use to rate securities. Learn more
Standard & Poor’s Ratings Services supports transparency by making its ratings available free to the public and by maintaining safeguards so that analysts don't have a financial interest in the securities they rate.
Meet Charlene Butterfield Janey, Director, U.S. Not-For-Profit Education Group. In this video, Charlene recounts her path from private-school English teacher to analyst at Standard & Poor’s Ratings Services. She also explains how the capital markets help institutions like hospitals and universities to finance their projects, as well as the unique set of analytical tools her diverse background has provided her.Watch